First Data Sets Record for the Year’s Largest U.S. IPO (Oct. 15, 2015)
In what is the largest U.S. IPO of the year, shares of First Data Corp. began trading under the symbol “FDC” this morning with the New York Stock Exchange (NYSE). The Atlanta-based payments processing and technology company yesterday announced pricing of its IPO of 160 million shares of Class A common stock at $16 per share. The company raised $2.5 billion. First Data opened today at $16.39 per share and, as of 3:30 p.m. EDT its stock was selling for $15.83.
“Today marks the start of an exciting new chapter for First Data,” said Frank Bisignano, First Data chairman and CEO. “We have undergone a major transformation in the past two years. We have built a client-centric business in which our primary focus is to help our clients grow their business. The initial public offering is another step in our transformation.” Bisignano was named CEO in May 2013.
First Data began officially exploring an IPO earlier this year, eight years after being acquired by private equity firm Kohlberg Kravis Roberts & Co. in 2007. The company plans to use the net proceeds from the IPO for the repayment of certain debts, among other uses, according to an SEC filing. First Data reported a net loss of $26 million for the second quarter ended June 30, 2015, compared with a net loss of $34 million in the same period in 2014. The company also reported total revenue of $2.9 billion in the second quarter, compared with $2.8 billion last year.
First Data serves approximately 6 million business locations and 4,000 financial institutions in 118 countries, according to the company, and processes more than 2,300 transactions per second and $1.9 trillion per year.
M-payments service provider Square Inc. is making IPO news of its own, announcing yesterday it has filed with the SEC regarding a proposed IPO of its Class A common stock. The number of shares to be offered and the price range for the offering have not been determined. Square intends to list its common stock on the NYSE under the ticker symbol “SQ.” Rumors had been circulating for more than a year that the company was going to go public before the company reportedly filed for an IPO with the SEC confidentially in July.
First Data’s IPO and Square’s follow several other payments companies going public this year, most recently Worldpay and CPI Card Group. The global payments industry experienced an extraordinary year in 2014, with revenues rising to 9 percent—more than doubling the previous year’s growth of 4 percent, according to a recent report, “Global Payments 2015: A Healthy Industry Confronts Disruption,” by McKinsey & Company. Though “macroeconomic and interest rate uncertainties could affect future performance,” the global consultancy reports a steady annual growth rate of 6 percent over the next five years, topping $2 trillion by 2020, compared with $1.7 trillion in 2014.
“While the payments outlook continues to be relatively robust, players will nonetheless need to be at their best,” the report authors suggest. “Rapid advances in technology and telecommunications will continue to drive change in the way people and companies do business—change that is already making legacy systems inadequate. Customer expectations will continue to keep pace with evolving technologies, thereby opening doors for innovative banks and nonbank players alike.”