Vantiv Confirms IPO Rumors

by Mercator Advisory Group 0

The payment processing joint venture between Fifth Third Bank and Advent International has filed its IPO registration, confirming rumors that have been swirling around the industry for months. Fifth Third sold roughly 51 percent of Fifth Third Processing Solutions, as Vantiv was then known, in 2009 to Advent in a deal valued at $2.35 billion. The JV went on to acquire National Processing Corporation, elements of prepaid company Springbok, and certain assets of Town North Bank in 2010.

In the company’s S-1 filing submitted to the SEC November 9th, $1.2 billion in gross revenues were reported for the year ended December 2010, a 35.6 percent increase from 2008. What the company calls net revenue – or revenue less network fees and other costs of transaction processing – increased 25.4 percent over the two-year period, while EBITDA rose 43.7 percent. Net income decreased from $152.6 million in 2008 to $54.9 million in 2010.

Ohio-based Vantiv…filed to raise up to $100 million in an IPO of Class A common shares.

In July, the Wall Street Journal reported that Vantiv was planning to file for an IPO that could value the company at as much as $4.5 billion, and hoped to raise between $750 million and $1 billion through the offering.

“Payment processors have been hot across the board,” Josef Schuster, founder of Chicago-based IPO investment firm IPOX Schuster, said. “Visa, MasterCard are trading near their highs … the underlying indications are that this could be a pretty good offering.”

Vantiv’s filing is at a time when the U.S. IPO market has begun to show signs of a recovery after a two-month hiatus in the middle of the year.

Europe’s debt crisis and a weak U.S. recovery had made it difficult to price issues. With the exception of Groupon’s trading debut last week, the U.S. IPO market has largely only seen small companies’ listings.

But things are definitely looking up, with at least two well-known companies’ IPOs — Delphi Automotive and Zynga Inc — expected to list before the end of this year.

In the preliminary prospectus filed with the U.S. Securities and Exchange Commission, Vantiv said its IPO is being underwritten by 11 investment banks, led by J.P.Morgan, Morgan Stanley, Credit Suisse, Goldman Sachs & Co and Deutsche Bank Securities.

“Initial performance (of an IPO) is somewhat related to underwriter reputation,” Schuster said.

“High-profile underwriters leave you with a better taste in your mouth, than investing with a second or third-tier company that is taken public by a second or third tier investment bank.”

Vantiv, which plans to list on the New York Stock Exchange or Nasdaq, serves over 400,000 merchant and financial institution locations in eight countries, helping them process credit and debit card transactions.

The filing did not reveal the number of shares that would be offered by Fifth Third or Advent International.

Fifth Third, which received $3.4 billion in bailout funds, had sold a piece of the payment processor to Advent International in 2009 as it looked to boost its capital levels in the wake of the financial crisis.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO can be different.

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