GTCR, a veteran financial technology investor, has won the auction for the North American payment business of U.K. software company Sage Group Plc.
The Chicago buyout shop agreed to pay $260 million for all of Sage Payment Solutions. The deal is expected to close in Q3.
The deal calls for $240 million cash and $20 million of deferred compensation, a statement said. Sage Group will also continue to receive revenue share from joint Sage and SPS customers. Antares, Ares, Jefferies, Barclays and NXT are providing financing for the deal.
Collin Roche, a GTCR managing director.
Sage Payment Solutions, Reston, Virginia, provides payment-processing and merchant-acquiring solutions in North America. The division produced 2016 revenue of 130 million pounds ($167.4 million). SPS gross assets were 258 million pounds ($332.3 million) as of March 31.
GTCR, whose past fintech deals include TransFirst, VeriFone and FundTech, has committed to invest up to $350 million in SPS, which will be supplemented with debt, said Collin Roche, a managing director. Sage Payment will also look to add people, he said. “We expect to be active buyers with this business,” Roche said.
Sage Group confirmed in December that it was evaluating strategic options, including a sale, for its North American payments business. The payments unit went on the block before the 2016 holidays. The competitive process drew interest from other PE firms and strategics.
At $260 million, the sale of Sage Payment came in at a bit more than half the $500 million that was expected. Roche declined comment on the price.
“We like to invest in businesses that can be transformed, that can be bigger and better than when we acquired them,” Roche said. Sage Payment “has very strong technology capabilities, but it does require some additional investment to bring those to market in the right way.”
Sage Payment will be better focused on serving its merchant and referral partners, Roche said. “They can expect a much more commercial and growth-focused SPS going forward,” he said.
GTCR used its 11th fund, which closed on $3.85 billion in 2014, to invest in SPS. The majority of Fund XI is invested, Roche said.
Steve Hufford, Mike Pokrassa, Kate Crespo and Matt Bernstein of Raymond James & Associates, as well as Citigroup Global Markets, advised Sage. Jefferies provided financial advice to GTCR. Jennifer Perkins and Ted Sonnenschein of Latham & Watkins, along with Paul Hastings, served as legal counsel to GTCR.
Action Item: Contact Collin Roche at +1 312-382-2200.
Photo of Collin Roche, a managing director at GTCR, courtesy of the firm.
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