Welsh, Carson, Anderson & Stowe and Lindsay Goldberg are separately looking to sell payment processing companies in the wake of Merchant e-Solutions’ $670 million sale, sources told Reuters. TransFirst is being shopped on behalf of WCAS by investment bank Financial Technology Partners and First American Payment System (FAPS) is being sold by Lindsay Goldberg.
(Reuters) – Payment processing companies TransFirst and First American Payment Systems are up for sale, seeking to capitalize on market appetite following Cielo SA’s (CIEL3.SA) $670 million takeover of Merchant e-Solutions, according to three people familiar with the matter.
TransFirst, owned by investment firm Welsh, Carson, Anderson & Stowe LP, has hired investment boutique Financial Technology Partners LP to run an auction and may fetch between $1.3 billion and $1.5 billion in a sale, the people said.
First American Payment Systems (FAPS), which is controlled by private equity firm Lindsay Goldberg LLC, is also for sale and could be valued at between $700 million to $800 million, according to the people familiar with the matter.
The people asked not to be named because the sale processes are confidential. TransFirst and Financial Technology Partners declined to comment while FAPS, Lindsay Goldberg and Welsh, Carson, Anderson & Stowe did not respond to a request for comment.
The universe of interested parties could include buyout firms such as Blackstone Group LP (BX.N), Carlyle Group LP (CG.O) and Hellman & Friedman LLC, as well as payment services firms such as WorldPay, Vantiv Inc (VNTV.N), TSYS and Moneris Solutions, the people said.
The auctions were spurred in part by the announced acquisition in July of Redwood City, California-based Merchant e-Solutions by Cielo, Brazil’s largest card payment processor, which was looking for capacity to settle more online transactions.
Following news of the deal, interested parties started to contact TransFirst. FAPS, which had tapped Goldman Sachs Group Inc (GS.N) for a sale in the past, decided to explore a deal once again, the sources said.
TransFirst, one of the largest providers of secure payment processing in the United States, currently handles about $30 billion in annual transaction volume for more than 175,000 merchants and financial institutions, according to its website.
Hauppauge, New York-based TransFirst expects to be valued at more than Merchant e-Solutions, whose price tag equated to 11.7 times earnings before interest, tax, depreciation and amortization (EBITDA), one of the people said.
A successful deal would reap strong returns for Welsh, which bought the provider of transaction processing services and technologies for $683 million in 2007 from GTCR Golder Rauner LLC.
Fort Worth, Texas-based FAPS, which is smaller than TransFirst, has roughly $80 million in EBITDA and may go for around nine times EBITDA, according to another one of the people.
FAPS handles close to $10 billion of annual transaction volume for over 115,000 active merchants, according to its website. It offers processing services for credit card, debit card and check transactions but focuses on small and medium-sized retail and service businesses.
(This story has been corrected to fix name of company in paragraph five to TSYS, instead of Telecommunication Systems Inc)
(Reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by Leslie Gevirtz)