First Data Gets $3.5 Billion Cash Boost
Payments processor First Data Corp. said it has received $3.5 billion in new investment, financially stabilizing the firm and reducing its debt burden.
Private equity firm KKR and Co., which owns Atlanta-based First Data, said June 19 that $1.5 billion of new money came from its own funds and those of existing investors, while $2 billion came from new investors, which included a “diverse group of pension funds, mutual funds, asset managers and wealthy individuals.”
First Data has not said exactly how many credit unions process debit or credit transactions on its card platform, but industry experts estimated between 500 and 1,000 credit unions and banks use at least one First Data service.
When announcing the new funding, KKR cited First Data's leadership change over the past year and First Data's new leaders picked up on the emphasis.
“We have taken full advantage of the last 12 months to strengthen our company through a total focus on serving our clients and bringing them new innovations that help them grow their business,” First Data CEO Frank Bisignano said in a statement.
“The enthusiastic response to our strategic vision and the resulting $3.5 billion investment in the future of First Data demonstrates confidence in the strategy on which we’ve embarked and validates the outstanding work of our 23,000 employee-shareholders. The new investment will unlock $375 million per year to help us accelerate our transformation,” Bisignano added.
The investment comes as welcome news after First Data received another $300 million from investors last year, a move which drew approval from at least one financial ratings agency but that was widely seen as insufficient for the long term.
PSCU, a major user of First Data's platform, approved.
“This is welcome news for PSCU and its member-owner credit unions,” said PSCU CFO Brian Caldarelli. “The investment and debt reduction gives them the financial resources to upgrade their consumer-facing payments solutions, including EMV technology.”
He added, “The overall impact is entirely positive for PSCU's credit unions and affirms our decision to partner with First Data in a long-term strategic relationship centered on continual innovation. We believe this is a positive move for First Data and represents a strong vote of confidence by their investors in their ability to deliver innovations that will help our credit unions grow their businesses.”