Business

Thursday 31 July 2014

Desmond sells €180m Optimal Payments stake for huge profit

Billionaire makes nine-fold return in four years

Nick Webb Business Editor

Published 02/02/2014|02:30

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Dermot Desmond
Dermot Desmond

Billionaire investor Dermot Desmond has pulled off one of his most stunning stock market coups netting almost €180m from the sale of his stake in listed online payments and money transfer group Optimal Payments.

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Desmond's IIU investment vehicle sold its entire stake in the company as part of a secondary share placing last week. It is likely that Desmond has made a near eightfold return on his investment in little over four years. Cannaccord is understood to have acted for IIU in connection with the placing.

Desmond bought a 25.65 per cent stake in a company called Neovia Financial in December 2008, through a vehicle called Primatur. Neovia had previously been called NetTeller. Based on the share price at the time, it is likely that he paid around €20m for the shares. He spent a further €1m to up his stake in August 2010.

In January 2011, Neovia Financial took over Canadian group Optimal Payments in a $50m deal, changing its name to Optimal. The deal saw Neovia expand from its NetTeller prepaid card service to become a more broader alternative-payments company. The business focussed on electronic wallets, prepaid cards and direct funds-transfer methods, which serve as alternatives to traditional card-based payments.

Shares in the company have trebled in value over the last year as it expanded its operations and inked some groundbreaking new partnerships.

Following completion of the placing, Optimal Payments' President and CEO, Joel Leonoff, said: "We thank IIU for their support through the past five years as a significant shareholder of Optimal Payments and wish them every success in their future endeavours. The successful placement of IIU's shares demonstrates the confidence that investors have in the company's prospects. We believe that our commitment to expanding the business and continued targeted investment will help drive sustained future growth in 2014, 2015 and beyond."

Desmond, the ultimate beneficial owner of IIU's shares, added "We thank Joel Leonoff and his team for their contribution to the success of Optimal Payments and for their hard work during the period that IIU has been a shareholder. We look forward to seeing the company continue on its path of growth and profitability and wish them continued success."

Desmond's hugely profitable Optimal Payments exit, is one of the most lucrative recent stock market coups masterminded by the IFSC-based financier.

Desmond, one of Ireland's richest men, made his fortune in the early 1990s when selling NCB Stockbrokers to Ulster Bank for around €45m. He invested his money in a number of promising businesses including Denis O'Brien's Esat Telecom and Fran Rooney's Baltimore Technologies, banking phenomenal profits when selling his stake in those businesses. Desmond has also made huge profits from flipping stakes in a number of Irish listed and formerly listed companies including Golden Vale, Greencore, Unidare and Dunloe. He also bought and sold stakes in Bank of Ireland during the economic crisis. He is also a 15 per cent shareholder in INM.

Desmond's biggest score is considered to be his buyout of London City Airport, which he bought for stg £23.5m in 1995. The airport, then in a neglected part of London's Docklands, thrived during the boom and expansion of London's financial services sector. In 2006, it was sold to a consortium consisting of insurers AIG, GE Capital and Credit Suisse for over €1bn. Desmond's other assets include stakes in Celtic Football Club and the Sandy Lane Hotel in Barbados.

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