Payment company sold for $370 million
Carla Wilson
Sun
Peter Gustavson outside the Custom House Currency Exchange in Victoria’s Bastion Square. Photograph by: John Mckay, Canwest News Service
Global payments company Custom House Ltd. of Victoria is being sold for $370 million US to Colorado-based Western Union.
Set to close this summer, the huge deal surpasses even the sale of Victoria-based Thrifty Food chain, Vancouver Island‘s largest private-sector employer, to Sobeys of Nova Scotia for $260 million two years ago.
Plans call for Custom House, which employs 150 in Victoria and another 630 employees in various countries, to continue running under its existing management in Canada, Western Union said.
Christina Gold, Western Union president and CEO, called Custom House a “dynamic business” with a significant customer base in the cross-border payments market.
The firm has a network of trading offices and operates around the clock daily. Payments can be made in more than 120 countries. Revenue is generated mainly from senders in Canada, the U.S., the U.K., Italy, Singapore and New Zealand.
Founder and chairman Peter Gustavson, who will no longer be involved with the company once the sale is complete, said he expects staff levels to grow under Western Union.
“I’m both excited and a little bit sad that I won’t be able to participate in the next phase of Custom House’s growth,” Gustavson said Thursday. “I’m sure that after a little bit of rest I’ll be back in, looking at something in financial services. … It will be a lot more fun starting a business with money this time.”
Gustavson began the company 17 years ago as a currency exchange in a retail space in the Custom House building at Government and Wharf Streets in Victoria, taking the building’s name to bring an official tone to the venture.
It moved to providing service over the phone, and then over the Internet.
“Then we became a global payment facilitator. Really, we just keep evolving and trying to stay one step ahead of the competition,” said Gustavson, who co-owns Custom House with Great Hill Partners of Boston, which holds 28.5 per cent.
The company now has close to 40,000 customers internationally, and its buyer said it is on track to generate $100 million US in annual revenue.
Gustavson said the company never grew less than 20 per cent in a year. “We kept challenging the status quo. Even though we had a successful business, we kept looking for the next big thing.”
Custom House has two main platforms, one for individuals and small business, the other for larger companies, he said. About 45 computer programmers are continually adding new functions.
“You want to stay ahead of the curve. You want to add new bells and whistles to make your product more attractive than your competitors’. If you don’t do that in business, eventually somebody is going to lap you, and you are going to end up being beaten in the marketplace.”
Recent global financial problems have led to skyrocketing sales since October, he said. “Our major competitors in the world are the banks. And the banks, for the most part, are on their back heels . . . giving us a big opportunity to grow our business.”
As the business grew, some people urged Gustavson to move to a centre such as Toronto or New York, but he resisted the idea. “In reality, Victoria has been the perfect place to build a financial-services business. It has a very skilled workforce, and it really didn’t matter where on the planet we were located.”
© Copyright (c) The Vancouver Sun