By Pamela Barbaglia and Jacob Gronholt-Pedersen
LONDON/COPENHAGEN (Reuters) - Payments firm Nets <NETS.CO> is set to enter exclusive talks with one of three private equity suitors as soon as next week, a source familiar with the matter told Reuters.
Hellman & Friedman, Permira and Nordic Capital have all completed due diligence on Scandinavia's largest payments processor.
Any successful private equity move on Nets would rank as one of the biggest take-private deals in Europe in recent years.
The source said Hellman & Friedman is determined to pay up to win control, while Permira and Nordic Capital are more conservative on price.
Permira is closely monitoring the process, another source said, and remains keen to buy the firm, which was one of Europe's biggest IPOs last year and has a current market value of about $5 billion.
Hellman & Friedman, Permira and Nordic Capital declined to comment.
Payments companies have refrained from joining the race as they lacked synergies with Nets' diversified portfolio of payments products, several banking sources said.
Once a backwater of banking, the payments sector is now both lucrative and fast-growing, but also faces competition from newcomers trying to disrupt the way merchants are paid.
The three buyout funds have spent the past two months carrying out due diligence on the Copenhagen-listed firm which is also the biggest issuer of Denmark's most-used debit card, Dankort.
Nets said on Friday that discussions were still ongoing regarding a potential takeover of the company.
The statement, which came in response to an FT report saying that Hellman & Friedman was the frontrunner in the race, follows a July 1 announcement that Nets had been approached by potential buyers.
Shares in Nets rose 1.4 percent on Friday to 156.60 per share, valuing the business at 30.89 billion Danish crowns ($4.9 bln), the highest since the company's IPO.
Interest in the company follows a similar 3 billion pound swoop by private equity firms Blackstone and CVC Capital on British payments firm Paysafe <PAYS.L>, which offers pre-paid cash cards and online wallets popular among online gambling customers.
London-based private equity house Permira recently bought a stake of at least 10 percent in payments firm Klarna, one of Europe's most highly valued tech start-ups. Nordic Capital sold its Stockholm-based payments firm Bambora to French rival Ingenico <INGC.PA> for 1.5 billion euros in July.
Payments companies have become sought-after targets as more shoppers switch from cash to digital platforms and a flurry of deals has pushed up sector valuations.
On Aug. 9 U.S. credit card processing company Vantiv <VNTV.N> clinched a milestone deal to buy British-based rival Worldpay <WPG.L> for 8 billion pounds in a bid to create a $29 billion global payments powerhouse.
"It's clear to me that we're entering a period of consolidation in Europe in line with what we've seen in the United States," Nets Chief Executive Bo Nilsson said on Aug. 17, pointing to an "extreme level" of M&A activity.
He said Nets had seen "considerable interest" from potential bidders, without naming them.
"As one of the biggest and most developed operators on the payment services market, I'm not surprised that some see Nets as a brick in that puzzle," he said.
Nets, which was previously held by buyout funds Bain Capital and Advent, was valued at $4.5 billion at the time of its listing last September, nearly doubling the sum paid by the two private equity investors when they started investing in 2014.
However, its shares have since struggled to trade above its IPO price of 150 crowns.
($1 = 6.2609 Danish crowns)
(Reporting By Pamela Barbaglia. Editing by Rachel Armstrong and Susan Fenton)