FT : Dealmaking in global payments sector hits new high



From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: 07/08/18 21:57:44
Subject: FT : Dealmaking in global payments sector hits new high
Dealmaking in global payments sector hits new high
Transactions hit $46bn in the first six months of the year compared with 2017’s $32.9bn

Rapid growth driven by a transformation in the way consumers pay for products has pushed dealmaking in the global payments industry to record heights, with 2018 already the biggest year ever in terms of acquisitions in the sector.

Payments technology — which includes consumer-facing products such as Apple Pay as well as the back-end infrastructure that enables transactions — has stood out even amid a general surge in merger and acquisition activity.

There were 102 transactions worth a total of $46bn in the first six months of the year, according to data from Dealogic, surpassing 2017’s full-year figure of $32.9bn.

PayPal alone made four acquisitions in five weeks in May and June, including swooping on Swedish group iZettle with a $2.2bn deal just weeks before it was due to list on the stock market.

Innovations such as contactless payments and online shopping have prompted massive changes in consumer behaviour in recent years; figures released last month showed cash is no longer the most popular form of payment in the UK, while other countries such as Sweden have moved even closer to becoming “cashless societies”.

Such consumer products have increased demand from merchants for new ways to cater to different customers, driving companies that deal with the back-end of payments to also expand their offerings.

Paypal’s recent acquisitions range from a marketing technology business to a company that helps sellers prevent fraud. Dan Schulman, PayPal chief executive, told investors at a recent meeting that he wanted the company to become “an end to end, one-stop solution for digital commerce . . . we are increasingly not just being a checkout solution”.

Investor enthusiasm for the sector has been reflected in public markets — shares in Dutch group Adyen, which competes with PayPal by enabling businesses to accept a range of different payment types, doubled on their first day of trading after its initial public offering last month. Paypal’s own shares have risen 60 per cent over the past 12 months, while fellow US group Square has jumped more than 180 per cent.

Payments companies’ high cash flow and relatively asset-light businesses have also made them attractive to private equity groups, which have been particularly active buying units that were previously owned by banks.

James Brocklebank, a managing partner at Advent International, said: “Ten years ago payments was sort of a boring utility which nobody cared about — it was just about finding the cheapest processing. Today most merchants see their payment providers as really strategic partners because they can help them sell more.”

Advent has been involved in 31 payments acquisitions in recent years, teaming up with Bain Capital and more recently Hellman & Friedman for several deals in Europe.

The surge in M&A and valuations has led some to question whether investor excitement for all things “fintech” and private equity groups’ bulging coffers could cause an unsustainable bubble in the sector.

However, Mr Brocklebank said he was confident there was extensive scope for further growth even in relatively established markets. “In countries like Germany and Italy the penetration of electronic payments is still really low. There’s significant growth to come in those places as more and more people adopt cards and electronic payments — we can see emerging market-like growth in developed economies, which is a really interesting opportunity.”

>>> Nestle activist Daniel Loeb looking to oust Chairman Paul Bulcke, could targ

Nestle activist Daniel Loeb looking to oust Chairman Paul Bulcke, could target board seat - report (translated)
09 JUL 2018
Nestle [VTX: NESN] investor Daniel Loeb (Third Point [NYSE: TPRE; LSE: TPOU]) is looking to oust Nestle Chairman Paul Bulcke, Sonntagszeitung reported. The Swiss weekly cited unnamed sources close to Loeb who said Loeb is targeting the removal of Bulcke. Loeb believes Bulcke should have stepped down at the last AGM as his move to Chairmanship after having been CEO does not help his successor Mark Schneider implement a cultural change at the company, the report stated.
The report said Loeb would consider nominating himself or a Third Point representative for election to the board at the next AGM should he be unable to place a director on the board with experience in the food & drinks industry. Loeb owns around 1.3% in Nestle having invested around USD 3bn in the group making Third Point the eighth largest shareholder, the report added. Loeb is supported by other shareholders including Schroders and Artisan Capital, the report noted.
A Nestle spokesperson declined to comment on Loeb's demands, the report stated.
The original article was published today on page 35.
Background:
On 1 July Third Point demanded Nestle split itself internally into three divisions - beverages, nutrition and grocery; spin off more businesses that do not fit its strategy such as frozen foods, ice cream, and confectionary; and appoint an outsider with expertise in the food and beverage business to the company board.

FT : Centamin says gold production fell by 25% in Q2

Gold miner Centamin said production fell by 25 per cent in the second quarter due to low grades of the metal at its mine in Egypt.

The miner said it was progressing through a “transitional zone” at the Sukari mine and “materially stronger” production is expected for the second half of this year. 

Centamin surprised the market in May by cutting its full year production guidance. The company said Monday it maintains that guidance of between 505,000 to 515,000 ounces of gold.

Gold production for the six months ending 30 June fell by 7 per cent to 217,099 ounces, Centamin said. For the second quarter the company produced 92,803 ounces of gold. 

“We have experienced several challenges this year, resulting in the revision of our full year guidance in May,” Andrew Pardey, chief executive, said.

“I am pleased to report progress throughout June in the open pit, where mining has begun to access improved grades as we are currently mining through the lower areas of the transitional zone and into the sulphide ore, which will be mined in the third quarter and onwards for the next four years.”

>>> What to look at today - 9th of July 2018

Asian stocks gained, building on a positive Friday session for global equities, as investors set aside concerns about escalating trade tensions to prepare for the latest earnings season after signs of continued economic strength.
China’s currency rose against the dollar one week after Chinese officials emphasized that they wouldn’t use the yuan as a trade-policy weapon. The dollar slipped to a three-week low, helping reduce pressure on emerging markets. Equity benchmarks in Japan, Hong Kong and Shanghai climbed, while Australian and Korean ones lagged behind. Ten-year Treasury yields ticked higher. The pound pared gains after the U.K. cabinet member in charge of Brexit discussions resigned from Prime Minister Theresa May’s government.

Nikkei +1.21% Hang Seng +1.71% CSI +2.40% Shanghai +2.06% Shenzen +2.16%

eur$ 1.1773 CNH 6.6238 CNY 6.6194 JPY 110.44 GBP 1.3320 CHF 0.9872 RUB 62.7621 WTI$ 74.16 +0.49%

S&P +0.35% EuroStoxx +0.47% FTSEE +0.55% Dax +0.53% SMI +0.37%

Macro :
- France to Tax U.S. Tech Giants by Yr-End or Early ’19: Le Maire
- EU Must Resist Temptation of Euro Pessimism: ECB’s Coeure
- U.S. Is Source of Global Uncertainty: BlackRock’s Hildebrand
- ECB’s Coeure Says World Order Being Called Into Question
- Germany Plans Tax Breaks for Companies Investing in Africa: HB

Keep an eye on :
- ADP FP : Le Maire: Selling Stake in Paris Airports Because It Has Value
- AIR FP : Airbus Seeks Key Role for U.K. in European Combat Jet Plan: FT
- AF FP : Air France-KLM June Passenger Traffic Rises 3.5%
- AF FP : Paris Metro CEO Considered for Air France KLM CEO Job: Figaro
- AKE FP : Arkema CEO Says Chemical Sector Safe From Trade Wars So Far
- ALO FP : Proxinvest Recommends Alstom Shareholders Reject Rail JV: WiWo
- ATC NA : Altice Urges Level Playing Field With U.S. Internet Companies
- AV/ LN : Aviva Hires Eight Senior Staff From Standard Life Aberdeen: FT
- BT/A LN : Alibaba in Talks With BT for Cloud Partnership in Europe Push
- BKIA SM : Spanish Government Studies Delay for Bankia Sale: Vozpopuli
- BMWQ GY : BMW Says It’s Calculating Necessary Price Increases for China
- BNP FP : France’s Le Maire Wants to Cap Bank Fees for Modest Households
- BTG LN : BTG Holders Urged by ISS to Oppose Remuneration Report: S. Times
- C US : Citi Names Haemmerle Head of France Corporate & Investment Bank
- 1COV GY : Covestro CFO Toepfer Says Company Looking for Acquisitions: BZ
- DAI GY : Daimler Halts Supplies of Some Truck Engines on Emission Issues
- DIS US : Ant-Man Seen With Estimated $83.7M Opening Weekend: Variety
- ELIOR FP : Elior Group to Raise Stake in Elior North America to 92%
- ENX FP : Euronext Eyes Growth Via Acquisitions: Lettre de L’Expansion
- GLPG NA : Galapagos Announces Design of Study With 2nd IPF Drug Candidate
- GRPN US : Groupon Is Said to Be Looking For a Buyer, Recode Says
- HEN3 GY : Henkel to Raise Prices, Look for Acquisitions: Rheinische Post
- ING FP : PayPal to Spend as Much as $3b/Yr on Takeovers, CEO Tells HB
- ISAT LN : EchoStar Walks Away From Its $4.2 Billion Bid for Inmarsat
- MF FP : Wendel, BC Partners, Rhone Prepare Bids for Maxam: Expansion
- NOVOB DC : Novo Nordisk Accepted Greek Bonds as Payment, Borsen Says
- ORA FP : Orange CFO Sees Europe Ripe for Telecom Mergers
- PIRC IM : Intesa, UniCredit to Remain Invested in Pirelli: Messaggero
- RNO FP : Renault Duster Sales Rise Almost 30% in 1H: Les Echos
- RDSA LN : Shell Drills Dry Well Near Knarr Field in North Sea, NPD Says
- RPC LN : RPC Short Sales Exceed GBP240m, Mail on Sunday Says, Citing FCA
- SIE GY : Proxinvest Recommends Alstom Shareholders Reject Rail JV: WiWo
- SOLB BB : Solvay CEO Says Trade War, Brexit May Hurt U.S., U.K. Investment
- SPOT US : Apple Music Should Have About 27M U.S. Users by Year End: FT
- STOB LN : Stobart Shareholders Re-Elect Chairman Ferguson in Narrow Vote, Stobart’s Chairman Ferguson Is Said Planning to Leave: Sky
- TENCENT (700 HK) : *TENCENT PROPOSES SPIN-OFF OF TENCENT MUSIC ENTERTAINMENT
- TKA GY : Obermann Offered Resignation From Thyssen Supervisory Board: HB
- TOM2 NA : TomTom Increases Stake in TomTom Africa to 100%; No Terms
- FR FP : Valeo Says Siemens Has No Short-Term Plans to Exit JV
- VAN BB : Van De Velde First Half Revenue EU110.8 Mln Vs. EU115.3 Mln Y/Y
- VIE FP : Veolia Expects to Beat Cost-Cutting Goal Again: CEO to Reuters, Veolia CEO: Brexit Won’t Deter Co. From Investing in U.K.
- VIV FP : Rolling Stones, Universal Music Group Report Partnership
- VOW3 GY : Diess Sees VW Struggling for Months With New Exhaust Tests: DPA
- WIHL SS : Wihlborgs First Half Income From Property Management SEK679 Mln
- WKP LN : Workspace Announces Disposal of 3 Properties for GBP51.9M
- WPP LN : Sorrell Offers MediaMonks Managers Stake in New Group: S. Times

>>> Europe : Brokers Upgrades & Downgrades - 9th of July 2018

>>> Up
* Altice Europe Upgraded to Top Pick at RBC; Price Target 6 Euros
* Asos Upgraded to Top Pick at RBC
* BP Upgraded to Top Pick at RBC; Price Target 6.75 Pounds
* Drax Upgraded to Top Pick at RBC; Price Target 3.70 Pounds
* EnQuest Upgraded to Speculative Buy at Canaccord
* G4S Upgraded to Top Pick at RBC
* Hansa Medical Raised to Top Pick at RBC; Price Target 330 Kronor
* Just Eat Upgraded to Top Pick at RBC
* KPN Upgraded to Top Pick at RBC
* Legal & General Upgraded to Top Pick at RBC
* Masmovil Upgraded to Top Pick at RBC; Price Target 165 Euros
* Meggitt Upgraded to Buy at Berenberg
* Molecular Partners Upgraded to Top Pick at RBC; PT 41.75 Francs
* National Express Upgraded to Top Pick at RBC
* Ontex Upgraded to Buy at Kepler Cheuvreux; PT 28 Euros
* Phoenix Upgraded to Top Pick at RBC; Price Target 8.20 Pounds
* Premier Oil Upgraded to Top Pick at RBC; PT 1.80 Pounds
* RWE Upgraded to Top Pick at RBC
* Sanne Group Raised to Top Pick at RBC; Price Target 9.50 Pounds
* Severn Trent Upgraded to Top Pick at RBC
* TalkTalk Upgraded to Neutral at JPMorgan; PT 1.10 Pounds
* UniCredit Upgraded to Top Pick at RBC
* Weir Upgraded to Top Pick at RBC
* Wizz Air Upgraded to Top Pick at RBC
* WH Smith Upgraded to Top Pick at RBC

>>> Down
* Cairn Energy Downgraded to Speculative Buy at Canaccord
* Genel Energy Downgraded to Hold at Canaccord
* Hargreaves Lansdown Cut to Underweight at JPMorgan
* Virgin Money Cut to Equal-weight at Barclays; PT 3.80 Pounds

>>> Initiation


>>> Call
* Just Eat, BP, KPN, UniCredit Among Large Cap Top Picks at RBC

TheVerge : Wired headphones are having their quartz moment

Wired headphones are having their quartz moment

The mechanical watches of personal audio

Film cameras. Vinyl records. Paper books. Mechanical watches. And now wired headphones.

There are some classes of personal technology that refuse to die, no matter how much more convenient, compatible, or simply cheaper their successors become. Wired headphones are under no immediate threat of extinction, but the future of personal audio will be defined and dominated by their wireless peers, that’s already clear. The question then arises, in my head at least, as to the role and prominence of wired cans in our ever more technological future, and the closest analog I can find is that of analog watches.

Back in the 1970s, the quartz revolution transformed the entire watch industry. Quartz clocks were vastly more accurate and mechanically resilient than even the most expensive and sophisticated of traditional watch movements, and they were cheaper and simpler to make. According to the Japan Clock & Watch Association, 1.42 billion of the 1.46 billion watches manufactured in 2015 were quartz, so there’s little dispute about the effect or scale of change that’s taken place in the four decades since Seiko’s first pioneering quartz watches. And yet, mechanical watches are still very much around, garnering the majority of horology enthusiasts’ passion and attention.

People, it turns out, just really like the skill and craftsmanship required to do mechanical engineering well.

The classic mechanical movement relies on the release of energy from a wound-up spring to swing a balance wheel in order to keep time, and there are a million little things that can undermine the precision of this process. A fully wound spring, for example, doesn’t release the same amount of force as an unwound one, so a watch has to regulate that somehow. The balance wheel can also be affected by the orientation and movement of the watch while you’re wearing it (or the side on which you rest it while not wearing it during the night). This fragility of the timekeeping process — which feels organic and natural in all the ways that an electronic clock is not — holds a certain romance for consumers. Like film and vinyl, it’s technically worse than the modern alternatives, and yet we find charm in those faults.

HEADPHONES ARE UNDERGOING A FAMILIAR TRANSMUTATION
Headphones are currently in the midst of their quartz moment. The past couple of years have seen wireless headphones advance in leaps and bounds, both in technical terms and in consumer awareness. Models like Apple’s AirPods and Sony’s noise-canceling 1000X have raised the bar of expectations and lowered the tolerance for wired inconvenience. Smartphones have stopped catering to the previously ubiquitous need for a headphone jack, adding extra pressure for everyone and everything to go wireless.


There’s still a sound quality delta between wired and wireless headphones, but for the broad majority of the market, it’s now too small to matter. All the data shows that the biggest growth in headphone sales is driven by the addition of wireless and other “smart” technologies. In the same way that watches went from mechanical to quartz to the current smartwatch stage, so too will headphones go from wired to wireless to some variety of smartness with a digital assistant in tow. The default expectation for consumer headphones going forward will be that they’re wireless. Having a wire will be a thing that a manufacturer will have to justify.

Watchmakers figured out that the best, or perhaps only, way to sustain their mechanical watch business was to sell those wares as luxuries. Fancy leather straps and sapphire crystal domes, product placements in Bond movies and on Formula 1 cars, and a general “finer things in life” vibe have all been used to mask over the technical superiority of quartz. The same approach has already been deployed successfully by a few headphone companies, the ones daring to put $3,000 stickers on their best goods and finding a receptive, if limited, audience.

WIRED HEADPHONES AND MECHANICAL WATCHES DON’T NEED BATTERIES, AND SO CAN LIVE ON INDEFINITELY
A final and important commonality between old school watches and headphones is that, in a certain sense, they’re immortal. You can leave your self-winding watch in its box for half a century, dust it off, give it a few shakes, and it starts ticking again like no time has passed. The same is true of wired headphones: all you need to make them sing is a headphone jack to plug them into. It’s the affinity we feel to that sort of timeless engineering — as contrasted against the battery-powered everything of modern life — that brings us back to technology whose era seems to have passed.

Over time, I expect the headphones market will figure out a happy middle ground, just as the watch industry has done. Wired headphones will be presented as exclusive, in part because their sales will naturally shrink, and luxurious, because to stand out they’ll need to have superior quality of materials and attention to detail. The one thing that won’t happen is a fate like that of feature phones, hard disk drives, and MiniDisc players: wired headphones won’t ever be consigned to the history books and extreme niches. What they do is too valuable, enjoyable, and technically charming for us to abandon them completely.

FT : Mitsubishi turnround raises questions for Nissan-Renault

Mitsubishi turnround raises questions for Nissan-Renault
Owner Carlos Ghosn seeks to cement Franco-Japanese alliance

The strong turnround at the scandal-scarred Mitsubishi Motors could jolt the fine power balance between Nissan and Renault as Carlos Ghosn looks to cement his Franco-Japanese alliance in the run-up to his retirement.

Analysts say the fast recovery of Mitsubishi, which is 34 per cent owned by Nissan, could increase the bargaining power of Japan’s second-largest carmaker when Mr Ghosn reviews the cross-holding structure of his global alliance. 

Mr Ghosn, who is chairman of all three carmakers and the alliance, is exploring closer links between the three groups — although a full merger that would jeopardise their autonomy is unlikely. 

He told the Financial Times last month that he is likely to step down as chief executive of Renault before his term ends in 2022. That suggests he is seeking to complete his task of making the alliance irreversible before he formally relinquishes operational control of the carmaker that he has led since 2005.

At a Mitsubishi shareholders’ meeting last month, Mr Ghosn flatly denied the possibility of the French carmaker taking over its Japanese partners. But the alliance structure, formed when Renault rescued Nissan from bankruptcy in 1999, has come under pressure in recent years as Renault has become the smaller partner in terms of production volumes and market capitalisation.

Speaking to the Financial Times, Trevor Mann, a Nissan veteran who joined Mitsubishi to help steer its turnround, did not rule out the option of Renault taking a stake in Mitsubishi. 

“Is today the right time? Probably not. Could it happen in the future? Possibly yes,” Mr Mann said. “You have got to do it when it’s right and it makes sense for you. Renault does not have a direct holding in Mitsubishi. That is not stopping us from looking for synergies with Renault because we are part of the larger alliance.”

The French group still wields de facto control at the Japanese company through a 43.4 per cent stake, while Nissan has no voting rights at Renault despite its 15 per cent holding. 

The alliance expanded to include Mitsubishi when Nissan acquired a controlling stake in its smaller rival for $2.3bn in 2016, catapulting the trio to the top league of global carmakers alongside Volkswagen and Toyota.

That investment came as Mitsubishi was grappling with a fuel economy scandal. Since then its fortunes have improved dramatically.

The company reported a 19-fold increase in annual operating profit to ¥98bn ($889m) in the 2017-2018 fiscal year, with nearly 30 per cent of its profits generated from alliance-driven cost reduction efforts. 

“If Nissan’s bargaining position increases, Renault’s relative position will appear to have declined, which could upset the existing alliance between the two companies,” according to Takeshi Miyao, chief executive of auto consultancy Carnorama. “In order to maintain the power balance, it may be necessary for Renault to invest in Mitsubishi.”

While some analysts have warned that the benefits of the alliance could taper off, Mr Mann said he expected them to increase as the car industry addresses rising costs of greater investment in developing electric, self-driving and digitally connected vehicles.

The Renault-Nissan-Mitsubishi alliance is targeting €10bn of annual savings by 2022 from combining manufacturing operations across the world and using a shared platform for constructing electric vehicles and other models. Last year it achieved savings of €5.7bn, up 14 per cent from a year earlier.

Mitsubishi’s role in reshaping the alliance will depend largely on how sustainable its recovery is. 

Nomura analyst Masataka Kunugimoto expects profits to continue expanding as Mitsubishi shares more technologies, components and vehicle platforms with Nissan and Renault. Yet despite its growth potential in south-east Asia, Mitsubishi's outlook in developed markets such as Japan and the US is uncertain. 

“Our concern is that it is stepping up forward investments … too quickly, and substantially increasing promotional and advertising spending in Japan and North America, where returns are low and there is no guarantee of success,” Mr Kunugimoto said.

While Mitsubishi will try to improve its position in the US, Mr Mann said the market was not sapping its resources: “I’m not doing the US instead of something else. Our priorities really are to make sure that we have solid foundations in the ASEAN market.”

FT : KKR shares surge after ditching partnership structure

KKR shares surge after ditching partnership structure
Private equity group’s conversion to a corporation is being closely watched by rivals

KKR’s gamble in ditching its tax-advantaged partnership structure in the hope of attracting new investors is showing signs of paying off, with its shares hitting an all-time high late last week.

The investment group converted to a corporation at the beginning of this month after the new lower corporate tax rate introduced by President Donald Trump changed the industry’s financial calculations.

KKR decided to forgo the tax breaks the partnership used to enjoy when it earned performance fees on its investments. It said it expected that access to a wider pool of potential investors would increase demand for its shares and push up its share price.

KKR shares jumped 8.5 per cent last week following its conversion, as investors took advantage of their first opportunity to buy the stock without having to wrestle with onerous tax filings.

The rally marked the first time that the shares had traded above $26, surpassing a previous high set more than four years ago. At Friday’s close they were at $27.04. It was also the busiest trading week on record for transactions in KKR shares.

The plan to convert was announced in May, months after the US slashed the corporate tax rate from 35 to 21 per cent. KKR estimates that, under the new law, it will initially pay 7 per cent tax on its income before the rate gradually increases over five years.

The investment group’s shares had previous failed to surpass 2014 levels even as a rebounding economy pushed the S&P 500 financials index 50 per cent higher.

Executives at KKR blamed the underperformance on the company’s former tax structure, which they say was off-putting to investors and unduly complex.

Before last week, each shareholder had to account for the firm’s income as if they had earned it themselves, filling in lengthy forms that covered everything in the KKR portfolio from foreign currency gains to drilling costs in North Dakota.

That effectively locked out index trackers and exchange traded funds, which prize administrative simplicity and account for a rapidly growing share of US assets as investors shun more expensive actively managed funds.

Mutual funds own fewer than one-third of KKR’s shares, compared with an average of 60 per cent for other financial stocks.

Private equity rivals such as Apollo, Blackstone and Carlyle have been watching the experiment closely and KKR’s share price rally could prompt copycat moves. Many other private equity firms are also structured as partnerships and face the same impediments to attracting mutual fund investors.

It is a costly gambit that involves paying extra taxes with no guarantees that the hoped-for stock market gains will materialise.

Shares in Ares Management, the first major private equity group to ditch its partnership tax structure, are 14 per cent lower than when its decision took effect on March 1.

“There are one or two adventurers out there,” Blackstone founder Stephen Schwarzman said, when asked in May about his firm’s plans. “Once you convert you cannot convert back. Let’s see what happens.”

FT : Dealmaking in global payments sector hits new high

Dealmaking in global payments sector hits new high
Transactions hit $46bn in the first six months of the year compared with 2017’s $32.9bn

Rapid growth driven by a transformation in the way consumers pay for products has pushed dealmaking in the global payments industry to record heights, with 2018 already the biggest year ever in terms of acquisitions in the sector.

Payments technology — which includes consumer-facing products such as Apple Pay as well as the back-end infrastructure that enables transactions — has stood out even amid a general surge in merger and acquisition activity.

There were 102 transactions worth a total of $46bn in the first six months of the year, according to data from Dealogic, surpassing 2017’s full-year figure of $32.9bn.

PayPal alone made four acquisitions in five weeks in May and June, including swooping on Swedish group iZettle with a $2.2bn deal just weeks before it was due to list on the stock market.

Innovations such as contactless payments and online shopping have prompted massive changes in consumer behaviour in recent years; figures released last month showed cash is no longer the most popular form of payment in the UK, while other countries such as Sweden have moved even closer to becoming “cashless societies”.

Such consumer products have increased demand from merchants for new ways to cater to different customers, driving companies that deal with the back-end of payments to also expand their offerings.

Paypal’s recent acquisitions range from a marketing technology business to a company that helps sellers prevent fraud. Dan Schulman, PayPal chief executive, told investors at a recent meeting that he wanted the company to become “an end to end, one-stop solution for digital commerce . . . we are increasingly not just being a checkout solution”.

Investor enthusiasm for the sector has been reflected in public markets — shares in Dutch group Adyen, which competes with PayPal by enabling businesses to accept a range of different payment types, doubled on their first day of trading after its initial public offering last month. Paypal’s own shares have risen 60 per cent over the past 12 months, while fellow US group Square has jumped more than 180 per cent.

Payments companies’ high cash flow and relatively asset-light businesses have also made them attractive to private equity groups, which have been particularly active buying units that were previously owned by banks.

James Brocklebank, a managing partner at Advent International, said: “Ten years ago payments was sort of a boring utility which nobody cared about — it was just about finding the cheapest processing. Today most merchants see their payment providers as really strategic partners because they can help them sell more.”

Advent has been involved in 31 payments acquisitions in recent years, teaming up with Bain Capital and more recently Hellman & Friedman for several deals in Europe.

The surge in M&A and valuations has led some to question whether investor excitement for all things “fintech” and private equity groups’ bulging coffers could cause an unsustainable bubble in the sector.

However, Mr Brocklebank said he was confident there was extensive scope for further growth even in relatively established markets. “In countries like Germany and Italy the penetration of electronic payments is still really low. There’s significant growth to come in those places as more and more people adopt cards and electronic payments — we can see emerging market-like growth in developed economies, which is a really interesting opportunity.”