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Chinese Raider Eyes £360m VAT Refund Giant

November 5, 2015

A state-owned Chinese payments processor has joined the race to buy one of the biggest administrators of VAT refunds for British consumers, underlining China’s growing appetite for pursuing sizeable foreign takeovers.

Sky News understands that China UnionPay, a national bank-card association established in Shanghai in 2002, has expressed an interest in buying Fintrax Group, which has been put up for sale by Exponent Private Equity.

The auction of Fintrax comes months after a row erupted over the charges imposed on airport travellers by leading retailers, which forced a climbdown by some of the high street’s biggest names.

Sources said that buyout firms including Bridgepoint and Hellman & Friedman were also among the remaining bidders for Fintrax.

If China UnionPay pursues its interest and secures a deal, it would be one of the biggest overseas takeovers by a Chinese company this year, and follow deals such as last week’s purchase of Hamleys the toy store chain, by Chinese investors.

Fintrax owns‎ subsidiaries including Premier Tax Free, which operates across nearly 30 countries and provides retailers with “an innovative and easy-to-use tax-free shopping solution, and shoppers with a quick and comprehensive refund network”.

Established in ‎1985, Fintrax also owns a payments systems business which offers “dynamic currency conversion”, which enables consumers to pay for goods in their domestic currency while travelling abroad.

The interest in Fintrax comes amid a burgeoning appetite from private equity investors to tap into more of the ‘plumbing’ associated with the financial services sector.

Bridgepoint, for example, owns Moneycorp, the foreign exchange provider.

Exponent does not provide detailed sales and profit figures for Fintrax but insiders say that it would expect to sell the company for much more than the €160m it paid to acquire it in 2012.

One of the bidders suggested that €500m would be a more reasonable valuation today given its rapid growth.

It emerged during the summer that retailers including Boots, Dixons and WH Smith were asking airport passengers to show their boarding passes at airside outlets, implying that they would benefit from the VAT savings, but without passing them on.

David Gauke, the Treasury minister, criticised retailers for the practice, some of which said they were unable to adopt a dual-pricing structure.

Mr Gauke’s Labour shadow, Gordon Marsden, called on the Government “to ensure that customers are being treated fairly so that it is not just retailers who can benefit from the relief”.

The criticism of retailers intensified when it emerged that some, including Marks & Spencer, were also charging more for items at their shops within hospitals than on the high street.