New PE Firm: PurePay

A new year often is accompanied by new private equity firms, and 2007 looks to be no different. One of the latest is PurePay, a Columbus, Ohio-based firm focused on the payment industry. It raised $100 million for its inaugural fund from a handful of regional commercial banks, which believe PurePay’s industry focus and “acquire and hold” model will provide both strategic and financial benefits.

I spoke briefly this morning with John Cullen, one of PurePay’s two managing directors (Steve Valachovic is the other). The brevity was a result of John being on a cell phone while negotiating heavy San Diego traffic, and I take pride in never causing an accident while interviewing. But I did learn the following:

Cullen and Valachovic began contemplating PurePay a little less than 18 months ago, after having worked together on a small telecom rollup. The impetus was the regional commercial banks that would become its limited partners (traditional GP/LP structure), which were looking to gain some arms-length operating benefit from a private equity firm focused on the payment space.  

Payment, in this case, is fairly broad. It includes such things as cash management, Check 21, ARC, remote capture, stored value cards, payment BPOs, ACH platforms, mobile banking and micro-payment companies. From a more thematic view, Cullen says that PurePay will pay particular interest to banking the unbanked, enabling teen spending and payment automation. 
Prospective portfolio companies will need to have a “proven” business model with an existing set of customers.

The firm currently is just Cullen and Valachovic, but plans to expand to eight fulltime professionals.