Vantiv IPO Raises $500 Million; Fifth Third to Get $95 Million

by Mercator Advisory Group 0

Shares of newly-public company Vantiv rose nearly 15% above the IPO price in the firm’s first day of trading on the New York Stock Exchange. Readers of PaymentsJournal are already likely familiar with Vantiv, a joint-venture of Fifth Third Bank and Advent International formerly known as Fifth Third Processing Solutions. Vanitv is currently the third largest merchant acquirer in the U.S., runs the Jeanie EFT debit network, and offers credit and debit card issuer processing processing for financial institutions.

The IPO of 29.4 million shares at $17 per share raised nearly half a billion dollars. Fifth Third said it expected to realize $95 million from the Vantiv IPO.

“This is the start of a great adventure,” chief executive officer Charles Drucker said. “This allows us to rapidly grow our business and expand into new markets and geographies. It’s an exciting time.” Drucker later rang the closing bell.

The regional bank has Class B stock as well as a warrant, both of which can be converted into common shares in Vantiv. The processor’s underwriters also have an option to purchase additional shares. Depending on the underwriters’ actions, Fifth Third will retain a 39- to 40-percent stake in Vantiv.

Once a critical subsidiary, Fifth Third spun off the processor to raise money amid the financial crisis. A rich source of fee income, the company processes debit and credit card transactions for retailers and smaller banks.

Drucker says the company also wants to grow through expansion into pre-paid cards as well as moving into processing for healthcare, government and education industries.

In 2011, Vantiv generated an $84.8 million profit on $1.6 billion in revenues.The region’s newest public company has said it will use the $500 million in proceeds from the IPO to pay down some of its $1.8 billion in debt.

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