Travelex restructures with backing from 3i

TRAVELEX, the specialist chain of airport currency shops, is being restructured with the help of a management buy-out backed by 3i, the venture capitalists.

The two existing institutional backers, Abbey National, which has had a 33 per cent stake since 1995 and now offers its own travel money service, and Investec, which bought the 21 per cent stake originally held by Hambros, are both selling out.

They will be replaced by 3i, which is financing an increase in the stake held by the existing management, led by the founder and chief executive Lloyd Dorfman, from 46 per cent to 67 per cent. In addition, 3i will hold directly a 33 per cent stake.

The company, which began with a single office in 1976 and expects to make a profit of pounds 7m this year before interest and tax, will eventually be floated but there will be no pressure to do so quickly, a 3i spokesman said.

Travelex maintains that the timing of the deal has nothing to do with the start of trading in the euro. National currencies will continue to circulate into 2002 and their eventual replacement by euros will mainly affect demand from tourists.

Tourists mostly buy their currency from high street banks and travel agents, 65 per cent of whose turnover comes from customers travelling to destinations in Euroland.

Travelex specialises in airport sites and intercontinental locations where it services long-distance and business travellers, whose demand for foreign currency is expected to grow at least in line with the overall volume of travel.

It also has numerous outlets in the US and Australia. Only 20 per cent of its business depends on short-haul tourists in Europe. As the pattern of demand for currencies changes, Travelex expects to develop partnership deals with high street outlets to provide their customers with currency as they pass through airports.