(Reuters) – Buyout firm Vista Equity Partners is in talks to acquire TransFirst Inc, a payment processing company that has filed for an initial public offering, for as much as $1.5 billion including debt, according to people familiar with the matter.
TransFirst owner Welsh, Carson, Anderson & Stowe is in discussions to sell the company to private equity peer Vista as an alternative to an IPO, the people said this week. They added that a decision on whether TransFirst will be sold to Vista Equity is expected as early as the end of this week.
Jefferies Group LLC has offered to help finance Vista’s bid for TransFirst, the people said. Jefferies is an investment bank that is not subject to the leveraged finance guidance issued by the Office of the Comptroller of the Currency and U.S. Federal Reserve to curb the issuance of risky leveraged loans.
The sources asked not to be identified because the talks are private. Welsh, Carson, Anderson & Stowe, TransFirst, Vista Equity and Jefferies declined to comment.
Based in Hauppauge, New York, TransFirst is one of the largest providers of secure payment processing in the United States. Last year, it processed about $42 billion in transactions, serving about 200,000 merchants.
A sale of TransFirst would vindicate Welsh, Carson, Anderson & Stowe’s second attempt to sell the company. The New York-based private equity firm previously explored a sale of TransFirst in 2012, only to abandon the effort in favor of having the company borrow more to pay out a dividend, Reuters reported at the time.
Welsh, Carson, Anderson & Stowe registered TransFirst with the U.S. Securities and Exchange Commission for an IPO in July. TransFirst had adjusted earnings before interest, tax, depreciation and amortization of $119.4 million in the 12 months to the end of June.
TransFirst competes with subsidiaries of banks such as Bank of America Corp (BAC.N) and Wells Fargo & Co WCF.N, as well as companies that include Heartland Payment Systems Inc (HPY.N), Vantiv Inc (VNTV.N) and Global Payments Inc (GPN.N).
Moody’s Investors Service Inc said in July it expected net revenue growth at TransFirst to remain in the high single-digit percentages over the next 12 to 18 months thanks to the addition of new merchant accounts.
Jefferies also agreed to finance another Vista Equity deal recently, its $4.3 billion acquisition of TIBCO Software Inc (TIBX.O), which was announced last week. JPMorgan Chase & Co (JPM.N) was the only bank regulated by the OCC and the Fed that agreed to join Jefferies in that financing.