GTCR buys majority stake in Worldpay

How does a company lose $17 billion in the space of four years? Fidelity National Information Services, better known as FIS, did it by acquiring leading payment processor Worldpay. FIS just disclosed it is selling a 55 percent stake in Worldpay to the private equity firm GTCR for $11.7 billion. GTCR also has committed to invest up to $1.25 billion in Worldpay to be used "to pursue inorganic growth opportunities."

FIS said the deal values the payment processing business at $17.5 billion, about half the $35 billion in cash and stock paid for Worldpay back in 2019. That combination of cash and stock put Worldpay's valuation at $43 billion, according to company statements at the time, which is more than twice its current valuation.

Positioning for success

GTCR is no stranger to payment processing. Its portfolio has included device manufacturer Verifone, transaction processor TransFirst, and Iron Triangle Payments, an amalgam of payments companies the Chicago-based firm put together in the early 2000s.

Charles Drucker, Worldpay's former CEO, will become CEO of the new stand-alone Worldpay. Drucker, who was CEO of one-time leading acquirer Vantiv, which acquired Worldpay and assumed its name in 2018, was tapped earlier this year to map out a planned separation of the merchant solutions business from FIS.

"This transaction allows FIS to partially monetize our merchant solutions business at an attractive valuation and provides certainty for stakeholders," said Stephanie Ferris, CEO and president of FIS. "At the same time, Worldpay will become a privately held company and benefit from the resources and expertise of GTCR."

Drucker concurred, adding, "This new separation path positions Worldpay for immediate success, combining the benefits of a well-established global brand and group of talented payments professionals with the energy of an independent startup, all back by a world-class private equity firm."

According to published reports, FIS was pressured to get rid of Worldpay by activist investors intent on putting a stop to the company's valuation free fall. The FIS share price has fallen by more than 50 percent to $35 since Worldpay was acquired. The deal is expected to close early in 2024, subject to regulatory and shareholder approvals.

Accelerating growth through M&As

Worldpay, which began life as a unit of Royal Bank of Scotland, is a leading provider of payment processing services, worldwide. It reports processing more than $2 trillion in transactions a year from over 1 million merchant locations. In a statement, GTCR said it is investing in the company to "enable accelerated growth through innovation and strategic acquisitions." As standalone company, Worldpay is also well-positioned to expand its geographic footprint and invest in key growth areas, GTCR noted.

GTCR also plans to pursue, in concert with Worldpay, "strategic M&A opportunities across verticals and geographies," to grow Worldpay's portfolio.

"Worldpay has established itself as a leader in the payments sector, and we see strong opportunity to enhance its existing physical, ecommerce and omni-channel presence through additional investment, allowing the business to capitalize on digital payment trends," said GTCR Co-CEO and Managing Director Collin Roche. "We look forward to leveraging the strength of the entire organization to build an even better business, positioning Worldpay for sustainable, long-term growth."

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