M&A Optimism Rises Even As NAB Stays Mum About Possible Sale

One of the nation's biggest independent sales organizations may be putting itself up for sale, indicating a possible thaw in an icy mergers-and-acquisition market for merchant processors. Reuters reported on Wednesday that Troy, Mich.-based North American Bancard has hired investment bank Deutsche Bank to advise it about a possible sale. The news service gave few details and said that neither privately held NAB nor Deutsche Bank would comment. North American did not return calls from Digital Transactions News. The company processes about $7 billion in payment volume annually for more than 100,000 merchants. It moved into a new, $25 million, 105,000-square-foot headquarters in Troy late last year. There were a few high-profile sales in the payment-processing industry last year, notably private-equity firm Advent International Corp.'s acquisition of 51% of Fifth Third Processing Solutions and the $81 million purchase by The ComVest Group, another private-equity firm, of the assets of Cynergy Data LLC in a bankruptcy court auction. Otherwise, it was a very quiet year on the M&A and portfolio-sales scene in 2009, brokers and acquiring executives told Digital Transactions magazine for a market review in December. Many would-be buyers were forced to the sidelines, unable to complete deals due to a lack of capital because of tight credit markets. Things might be about to change, according to acquiring-industry researcher David Fish, senior analyst at Maynard, Mass.-based Mercator Advisory Group Inc. Fish says buyers are interested in purchasing merchant portfolios from ISOs and small banks, and bigger companies are interested in buying entire firms. With the economy improving, at least a bit, financing might become easier. “2010 could be the year of several M&A acquisitions as well as portfolio acquisitions,” he says. Fish notes that United Kingdom-based Royal Bank of Scotland Group may be selling its worldwide merchant-processing business, RBS WorldPay, which includes a sizable Atlanta-based U.S. operation. Persistent rumors claim Kohlberg Kravis Roberts & Co., the investment firm that bought No. 1 card processor First Data Corp. in 2007, may do an initial public offering for First Data. And a team of merchant-acquiring executives led by the chief executive of AmericaOne Merchant Services Inc., a San Jose, Calif.-based independent sales organization, formed a new company called International Payments Corp. to buy ISOs. The executives said they have $150 million in private funding. IPC did not return a call for comment. Fish, a former North American Bancard executive, says he has no knowledge about the company's possible sale. If the report proves true, “I think that this type of thing is indicative of increasing activity in the portfolio transaction space within acquiring,” he says. “It is a buyer's market.”