Palamon buys into German retail

The UK buyout firm has bought a majority stake in Germany’s largest loyalty card scheme Payback in a deal valued at €225 million.

Palamon Capital Partners has bought a stake of approximately 60 percent in Loyalty Partner, the company that operates Germany’s largest loyalty card scheme operator Payback.
The main vendor is German airline Lufthansa AG, which is selling a 52.6 percent stake in a deal that values the company at more than €225 million ($270 million) including debt. German retail group Metro is also reducing its 25.1 percent stake to around 10 percent in the transaction, while the company’s founder and CEO Alexander Rittweger is increasing his stake from 14.8 percent to 20 percent.

We see significant growth potential by adding further retail partners to the core business

Daan Knottenbelt, partner, Palamon Capital Partners

Daan Knottenbelt, the partner at Palamon who led the deal, told PEO: “Loyalty Partner has been very successful in establishing itself and is now one of Germany’s top ten brands. We see significant growth potential by adding further retail partners to the core business. The company is also a wonderful platform from which to launch other products and services.”
He cited the firm’s insurance products and credit cards as potential growth areas, as well as its outsourcing business which operates loyalty programmes on behalf of other companies.
Launched in 2000, Payback has issued 28 million cards to 20 million customers and had sales of €100 million in the last financial year.

Knottenbelt: betting on German retail

Palamon is also hoping to benefit from the widely predicted consolidation of the German retail sector. “The big companies are getting bigger, and the small are getting smaller,” said Knottenbelt. “Big companies have benefited from the growth of loyalty card networks.”