An Update on Credit Card M&A Activity
The credit card portfolio sale market registered a high level of activity through the first half of 2012. Deal activity continues to be fueled by the realignment of the partner businesses for a few of the large issuers.
First Annapolis tracks and compares portfolio sale activity from year to year. The $5+ billion of receivables transacted in the first half of 2012 represents a significant uptick in volume; indeed, more receivables changed hands in the first half of 2012 than in any full year between 2006 and 2010. The bookends on either end of this period are characterized by “mega deals” of MBNA (2005) and HSBC Cards USA (2011). Nonetheless, for a period without a big deal, the level and composition of deal volume is evidence of the continued and ongoing realignment of the credit card partnership market segment by bank buyers and sellers.
Of particular note, Absa Bank – a member of Barclays – acquired the 10 billion rand store card program of Edcon, South Africa’s largest non-food retailer with 1,167 stores and retail sales of 25 billion rand in 2012. Absa and Edcon entered into a long-term, strategic relationship in which Absa will provide retail credit to Edcon customer and Edcon will be responsible for all customer-facing activities. Absa gains access to 3.8 million active accounts and unparalleled customer reach across the full spectrum of consumers in South Africa. Edcon is owned by Bain Capital. This transaction follows the path set by leading retailers, around the globe, to partner with exceptional third-party providers for the provision of credit.
Figure 1: Recently Announced Credit Card M&A Transactions
For more information, please contact Jeff Poorman, Principal specializing in M&A, firstname.lastname@example.org
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