Vista Equity to sell TransFirst for $2.35 bln after brief hold

Vista Equity Partners is selling TransFirst for $2.35 billion after owning the payment processor for a little more than a year.

Payment processor TSYS has agreed to buy TransFirst, one of the largest providers of secure payment processing in the United States. The company handles about $48 billion in annual transaction volume for more than 200,000 merchants and financial institutions. TSYS said its acquisition of TransFirst will result in it supporting more than 645,000 merchants.

TransFirst’s projected EBITDA is $170 million, which means TSYS bought the company for 13x to 14x EBITDA, said a banking source. “It’s a very attractive deal,” the banker said.

Buyouts reported in October that Vista was conducting a dual process for TransFirst. The company filed to raise $100 million on October 16 and also was working with advisors to find a buyer, sources said at the time.

Vista Equity bought Hauppauge, New York-based TransFirst in November 2014 in a deal pegged at $1.5 billion. Vista invested $566 million in common equity into the deal, according to a Standard & Poor’s Ratings Services note from that time. The $2.35 billion sale to TSYS is nearly 57 percent more than what Vista paid a little over year ago.

Vista, which bought TransFirst from Welsh, Carson, Anderson & Stowe in 2014, was the third private equity firm to own the company. Welsh Carson acquired TransFirst for $683 million in 2007 from GTCR.

During Vista’s short ownership, TransFirst doesn’t appear to have paid any dividends to its shareholders. (In May, TransFirst did use $130 million in loans to issue a dividend to repay a shareholder loan to its PE owners, S&P said.)

Welsh Carson owned TransFirst for seven years. The firm tried to sell the company in 2012, but then opted for a dividend recap.

Vista had a much easier route to sale. About 18 months ago, TransFirst significantly improved its business as it was gearing up to be a public company, the banking source said. The company built out its back-end settlement capability while also enhancing its sales channels, the banker said.

Vista used its fifth flagship fund, which closed at $5.7 billion in October 2014, to buy TransFirst. Performance data for Fund V was unavailable.

Vista’s fourth flagship fund collected $3.5 billion in 2012. That fund generated a 21.4 percent IRR and a 1.68x total value multiple as of September 30, according to the Oregon Public Employees Retirement Fund, an investor in the fund.

Vista is expected to launch its next flagship fund this year, Buyouts has reported. Vista Equity Partners VI will be larger than the prior fund, but it’s not clear how much the firm will target. Bloomberg said in October that Vista will seek as much as $8 billion for Fund VI.

Matt Sharnoff of Bank of America Merrill Lynch and Sean Minnihan of GCA Savvian Advisors LLC provided financial advice to TSYS, while First Annapolis Consulting acted as strategic advisor.

King & Spalding LLP provided legal advice to TSYS. Credit Suisse, Goldman Sachs and J.P. Morgan provided financial advice to TransFirst and Vista. Kirkland & Ellis, led by Stuart Casillas, was legal advisor to TransFirst and Vista.

TSYS and TransFirst could not be reached for comment.

Action Item: Vista Equity Partners CEO Robert Smith can be reached through his assistant Maria Nicholas at 512-730-2480.

Photo of CEO Robert Smith courtesy of Vista Equity Partners