Fexco and Apax join forces in takeover of Global Refund

The Swedish-based Global Refund group has been bought out by its management in partnership with Apax Partners and Fexco in a #150 million (£118.13 million) deal. Apax Partners, an international private equity investment group, will have a majority stake in the operation while Fexco will have "a substantial minority stake" and the existing Global management team, led by chief executive Mr Per Setterberg, will own 13 per cent of the business.

The exact size of the Apax and Fexco stakes are not being disclosed, according to the managing director of Apax Partners in Dublin, Mr Pierce Casey. But it is understood that Apax has around 60-65 per cent of the operation, while the Fexco stake is thought to be somewhere under 25 per cent. The deal is being backed by a #95 million loan advanced by a syndicate comprising AIB, Bank of Scotland and Royal Bank of Scotland.

Global Refund is the world's largest value added tax refund services company, operating in 25 countries. It processes VAT refunds on goods sold to foreign travellers and operates more than 500 cash refund offices at international airports and other departure points. It has more than 130,000 affiliated retailers. Global, being sold by Cendant Corporation, is expected to process about eight million transactions in 1999, involving a purchase value of #2.5 billion. It is expected to generate total commissions of #90 million and profits before interest, tax and depreciation of #23 million this year.

Mr Casey said the transaction reflected his company's "continuing focus on international growth buy-outs in our area of specialisation". Apax has invested a "significant amount of cash" in the deal, he said. Describing the deal as a breakthrough for the Apax Dublin operation which originated it, he said it was "the largest-ever international management buy-out involving an Irish company".

The partners plan to expand the operation, which Mr Casey said was in a natural growth market as more governments look to introduce indirect taxes, with many choosing the VAT model.

Fexco is contributing an undisclosed amount of cash and its equity stakes in two existing joint ventures with Global Return, in exchange for its minority stake in the operation. Managing director Mr John Nagle said the deal provided Fexco with direct exposure to all the key markets in Europe as well as in Argentina and Singapore.

"This is a perfect fit with our existing VAT business, which has been successful in Ireland since 1984 and in the UK and France since 1986. This transaction is an ideal way to increase our exposure to the global VAT refund industry," Mr Nagle said. The deal would also give Fexco access to net outlets for some of its financial products, he said. Fexco was introduced to Mr Casey and Apax through its bankers, AIB.

A private company, Fexco was established in Kerry by Mr Brian McCarty in 1981 to set up and manage a bureau-de-change business. The company has expanded rapidly, adding on a range of niche financial products and teleservices. It now employs 750 people in offices in Ireland, London, Glasgow, Paris, Madrid, Malta and Dubai. Earlier this year, Fexco made a 30 per cent investment in two Australian publicly-quoted companies, Prudential Investment and Alliance Properties.