Next week could see payments firm First Data begin the first steps to raise as much as $3 billion in an initial public offering, The Wall Street Journal reported Monday (Sept. 21).
An IPO of that size would represent the biggest offering so far this year. First Data, which was taken private by private equity firm KKR in 2007 for a roughly $26 billion price tag, could file documents offering up a price range for its common stock, unnamed sources told WSJ. That range would likely be between $20 billion and $25 billion, and proceeds raised from the issuance would be used to pay down the $21 billion in debt on its books. The shares’ debut on the public markets could come as soon as the second week of October, after a few weeks of a “roadshow” where the company pitches its story to and gauges interest from investors.
A market cap of $20 billion to $25 billion would, WSJ noted, “represent the beginning of a return on investment” for KKR, which bought the firm just at the peak of a leveraged buyout frenzy that was, of course, followed by the financial crisis and a huge drop in consumer spending — and the credit card and debit card transactions that make up First Data’s bread and butter.
[bctt tweet=”A First Data market cap of $20 billion to $25 billion would, WSJ noted, “represent the beginning of a return on investment” for KKR.”]
That meant swiftly declining values for the First Data business itself, and the buyout firm eventually marked down its estimation of First Data’s worth to $.60 on the dollar. Amid First Data management changes, KKR and other investors put up an additional $3.5 billion into the company last year.
Revenue growth has returned to First Data over the past six quarters, and profit finally came in 2014.
KKR is not selling any stock in the deal, WSJ reported.
Amid the move toward public markets, First Data is pushing into open source payments, having bought Spree Commerce, an open source storefront platform earlier this month. And over the summer, the payments processor launched Clover Mini, a new POS device for brick-and-mortar stores.
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