Advent International will pay $561 million to acquire a 51 percent stake in Fifth Third Bancorp’s financial institutions processing business, continuing its expansion of its pay processing portfolio.
Advent will acquire the business through a joint venture it has launched with Fifth Third that values the processing business at $2.35 billion. Fifth Third will retain a 49 percent stake in the company.
“The cash proceeds represent 13 times the earnings divested,” Kevin Kabat, chairman, president and chief executive officer of Fifth Third, said in a statement. “And the valuation of the business, at 3.3 times 2008 net revenue, compares favourably with large publicly traded processing businesses.”
Advent, a Boston-based buyout firm, has been investing in the financial services sector for more than 20 years, and has backed more than 25 companies worldwide in a range of sub-sectors, including payments, transaction processing and financial technology.
The firm entered transactions with several payment processing companies, including CSU CardSystem, a card processor in Brazil, which went public in 2006; Dolex Dollar Express, a money transfer business Advent sold to Global Payments in 2003, and Monext, a French-based bank processor Advent bought in 2008.
Advent purchased the French electronic payment business of London-listed credit checking giant Experian last year. The value of the deal was not disclosed, but Advent said the business generates €60 million of revenue. The company processes payment by card, mobile and internet banks for retailers.
Advent, founded in 1984, has raised more than $24 billion in private equity capital. The firm’s global funds invest in Central, Eastern and Western Europe, as well as North America, Latin America and Asia.