PE nearly shut out of Shift4 Payments auction

  • Searchlight established Lighthouse in July 2017
  • Lighthouse rebranded as Shift4 in January 2018
  • Initial bids for Shift4 were due last week; FT advises

Second-round bids for Shift4 Payments LLC are due in May, but don’t expect much involvement from private equity, two sources said.

Searchlight Capital Partners put Shift4 Payments up for sale earlier this year, they said, adding that FT Partners is advising on the process.

Initial bids for Shift4 Payments were due last week, the first source said. The company received about five proposals, of which three came from strategics, both said. The three offers were each in the $2.5 billion range, the first person said.

A PE portfolio company was responsible for one of the remaining two bidders, the first person said. Potential buyers came from sectors including food and beverage, travel and hospitality, as well as health and fitness, the source said.

“No pure PE [was] let in the deal,” the source said.

Shift4 Payments will likely sell to a strategic but the $2.5 billion price seemed high, the second source said. “It will trade,” the person said.

Searchlight was formed by Eric Zinterhofer, former co-head of media and telecom at Apollo Global Management; Oliver Haarmann, former partner at Kohlberg Kravis Roberts, who helped build the firm’s European operations; and Erol Uzumeri, who formerly led the private equity business at Ontario Teachers’ Pension Plan.

The PE firm is targeting $2.75 billion for its third flagship, Buyouts reported last week.

Shift4 Payments is the former Lighthouse Network, which Searchlight established in July 2017.

In January 2018, Lighthouse acquired Shift4 Corp, a provider of secure payments to customers in the food and beverage, hospitality, gaming, lodging, as well as retail and e-commerce sectors. A month later Shift4 acquired three companies: Restaurant Manager, POSitouch and Future POS. Lighthouse rebranded as Shift4 in January 2018.

Shift4, Las Vegas, is led by Jared Isaacman, founder and CEO of Harbourtouch Payments. Searchlight invested in Harbourtouch, a non-bank merchant acquirer and payments provider, in 2016.

Shift4 processes more than 1 billion transactions annually for nearly 200,000 businesses. The company is expected to produce $150 million Ebitda this year and more than $200 million next year, the first source said.

Mergermarket first reported the news that Shift4 Payments was up for sale.

Executives for Shift4 and FT Partners declined comment. Searchlight could not be reached for comment.

Action Item: Shift4 Payments’ website is here.