UK-based Retail Decisions (ReD) is one of the leading global providers of payment fraud prevention technologies and services to merchants, card issuers, acquirers and processors and screens one in four e-commerce transactions in the US. The business has been in the ownership of Private equity house Palamon for the last eight years and will be passing over to ACI Worldwide for around $205 million (£120 million) a little over 11x turnover.
With its headquarters in Surrey, ReD is a leader in several key country markets, including the US where it screens over 25% of e-commerce transactions. The Company’s flagship product ReD Shield, a real-time, on-line fraud prevention solution, is used by large e-commerce and multi-channel merchants in North America, Europe, Asia-Pacific and Latin America, to boost on-line revenues while reducing fraud losses.
ACI Worldwide will acquire ReD for £120 million in cash and if the deal is closed in the middle of the third quarter, 2014, they expect ReD will generate approximately $18 million (£10.5m) in revenue and $4 million (£2.3m) in adjusted EBITDA for the remainder of 2014.
Palamon acquired ReD in a take-private in December 2006 for £200 million alongside co‑investors, Morgan Stanley Alternative Investment Partners and AlpInvest. At the time of its acquisition, in addition to its payments fraud prevention business, ReD operated fuel and gift card businesses in Europe and Australia. Following the global financial crisis, Palamon started to sell off some of ReD returning 80% of the original £200 million invested through the sale of three separate division: the UK Fuel Cards business in August 2009, the Australian businesses in September 2010 (around £192 million) and the European fuel card business in March 2011.
In the last few years, ReD launched several solutions such as ReD Fraud Xchange, an on-line platform that enables real-time collaboration between merchants and issuers in the fight against payment fraud, and ReDi, an interactive, self-service business intelligence tool for e-commerce transactions. In parallel, the Company significantly broadened its partner channel across the globe and today has partnership agreements with leading payments companies such as Global Collect, First Data, FIS, EVO Payments, Worldline, Sage Pay, Yapital, PayU and UOLDIVEO.