GTCR's acquisition of a stake in the payments division will involve a substantial bank financing package worth a staggering $8.4 billion.
GLOFidelity National Information Services, a US financial technology group, has reached an agreement to sell a majority stake in its merchant payments division, Worldpay, to private equity firm GTCR. The deal values Worldpay at up to $18.5 billion, making it one of the largest corporate carve-outs in history. To finance the acquisition and help unwind FIS’s previous $30 billion acquisition of Worldpay, GTCR will secure over $8 billion in bank debt financing.
This financing package represents the largest of its kind for a new private equity buyout since the capital markets faced turmoil in the spring of 2022 due to the Federal Reserve’s aggressive interest rate hikes. FIS will receive net proceeds of $11.7 billion and retain a 45% stake in Worldpay. GTCR plans to invest over $5 billion in equity into Worldpay and values FIS’s remaining 45% equity interest at approximately $4.5 billion. The purchase will be funded by a debt of $8.4 billion raised from a syndicate of lenders led by Goldman Sachs and JPMorgan, with participation from Citigroup, Wells Fargo, UBS, and Deutsche Bank.
This acquisition marks a potential return of lenders to financing large private equity buyouts after a period of reluctance. GTCR’s valuation of Worldpay is based on a multiple of 9.8 times its expected fiscal 2023 adjusted earnings before interest, taxes, depreciation, and amortization, resulting in an upfront valuation of $17.5 billion. The final valuation could reach $18.5 billion, depending on the returns GTCR earns from the deal. GTCR has a history of investments in the payments sector, including a previous sale of a business to Worldpay for over $1 billion in 2010.
