It looked like proof that private equity had more money than sense — a pricey $6 billion consortium deal for Nordic payments group Nets A/S led by Hellman & Friedman in late 2017. The transaction may yet prove the naysayers wrong.

At the time, Hellman & Friedman Chief Executive Officer Patrick Healy told the Financial Times the buyout firm had paid more than it wanted to, but “that’s what was required to get the deal done.” Three years on and Italian payments peer Nexi SpA is in talks to buy Nets in exchange for a stake in the enlarged company, taking it public for the second time in five years.

Nexi says it would value Nets on an equivalent multiple of 2020 expected Ebitda. Its own multiple was nearly 18 times as of Friday but has been higher in recent months. On that basis, Nets would be worth around 7.2 billion euros ($8.4 billion) assuming its roughly 400 million euros of Ebitda last year has held firm. Deduct net debt and the equity is then worth around 5.4 billion euros.

The Hellman & Friedman consortium wouldn’t get all that value. Nets bought another payments group, Concardis, for stock in 2019. Assume that diluted the original private equity owners to an 80% holding and their share of the value from a Nexi tie-up would be worth around 4.3 billion euros. Still, the equity in the original buyout was just 2.7 billion euros, a Nets bondholder presentation suggests. If no other money has gone in or out since, the annualized returns would be running in the high-teens percent.

Those gains partly reflect the fact that Hellman & Friedman is selling Nets on a higher multiple of profit than it originally paid. No buyout baron should ever bet on achieving that. Even so, the reality is that listed payments groups trade on stronger profit multiples now than they did three years ago. Leverage amplifies the effect.

Did Hellman & Friedman add any value itself? Its overhaul of the business isn’t immediately apparent in revenue and Ebitda numbers that look barely changed from 2017. But the private equity owners added capabilities Nets lacked, in mobile payments and analytics, and expanded its footprint with the acquisition in Germany. A subscale division was sold to Mastercard Inc. Without this re-jigging, Nets would have arguably been a less desirable partner, too narrow in its services and its geographical presence.

The final returns will emerge over time whenever the consortium chooses to sell down. The realization of the touted financial benefits of a Nexi merger — an unitemized 150 million euros annually — would provide some extra uplift. Public-market investors in Nets will be wondering if they shouldn’t have sold. But it didn’t feel that way at the time, and it’s not clear they would have endorsed the strategy and leverage that private equity brought to bear here. As things stand, Healy looks set to claim vindication.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.

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