Friday , November 22, 2024

With Signs of an Improving IPO Market, Payment Processor Vantiv Preps To Go Public

Vantiv Inc. filed a registration statement on Thursday for a proposed initial public offering of common stock that, if successful, would have a business started by Fifth Third Bancorp join the thin ranks of publicly traded processors that get most of their revenues from merchant acquiring.

Vantiv, formerly known as Fifth Third Processing Solutions, didn’t say when its IPO would occur or how many shares it plans to sell at what price. Vantiv’s filing with the Securities and Exchange Commission lists a maximum of $100 million to be raised, but that figure is for purposes of calculating the registration fee and could change. The registration statement says the company would use some of the proceeds to pay down debt, the long-term portion of which totals $1.75 billion.

Cincinnati-based Fifth Third sold a 51% stake in Fifth Third Processing to private-equity firm Advent International for $561 million in 2009 and retained 49% ownership. After the IPO, the bank would retain an undetermined ownership stake but 19.9% of the voting interest, according to the filing. The filing didn’t calculate Advent’s future ownership stake.

Vantiv, based in suburban Cincinnati, would not comment about the proposed IPO, but rumors of it have been circulating for several months with an improving market for new stock offerings. The name change in June further positioned the processor for more independence from Fifth Third.

Vantiv says it is the nation’s third-largest merchant acquirer and the largest PIN-debit acquirer. The company services more than 400,000 merchant locations; customers include nine of the nation’s top 25 retailers by revenue.

Vantiv processed a total of 6.22 billion total transactions in 2011’s first six months, up 17% from 5.31 billion in the year-earlier period, the filing says. The merchant-processing segment handled 4.52 billion transactions in the first half, up 17% year-over-year. The segment generated net revenues of $255.9 million, up 129%, and profits of $154.4 million, up 80%. Contributing to the big increase was Vantiv’s November 2010 acquisition of Louisville, Ky.-based National Processing Co. (NPC), a processor serving more than 200,000 locations of small and mid-size merchants.

Financial Institution Services, the segment that provides debit and credit card processing, ATM driving, and related services for over 1,300 mostly small and regional banks and credit unions in addition to Fifth Third, handled 1.7 billion transactions through June 30, up 19%. Net revenues for the first half grew 12% to $150.2 million. Segment profit increased 11% to $136.9 million.

If it goes public, Vantiv would join Global Payments Inc., Heartland Payment Systems Inc., Total System Services Inc. (TSYS), and some smaller public companies in getting most, or in TSYS’s case a large minority, of their revenues from merchant processing. But senior analyst Adil Moussa of Boston-based Aite Group LLC says Vantiv, like the other big processors, may find few easy growth opportunities.

“Processing in general is a field that’s getting more and more squeezed, so I don’t know where they see the growth or plan to get the growth from,” he says. “Maybe the future is to buy volume, that’s the only way to survive in this market.”

Vantiv’s registration statement says the company indeed is looking to grow through acquisitions, of which it has made three since 2009. Other plans include moving beyond its Midwestern base, expanding its direct and indirect distribution channels, and even seeking new business abroad. “In the future, we will also look to augment our U.S. business by selectively expanding into international markets through strategic partnerships or acquisitions that enhance our distribution channels, client base, and service capabilities,” the filing says.

Check Also

Flywire Teams With Blackbaud to Enable Cross Border Tuition Payments in the U.S.

Flywire Corp., a specialist in payments for higher education, has partnered with Blackbaud Inc., a …

Digital Transactions