First Data IPO: Enormous Debt Is A Warning Sign And An Opportunity

Payment processing giant, First Data, returned for a second round to the public markets.

The company was acquired by KKR for $30B and currently carries more than $20B of debt on its books.

As capital restructuring process is in place, some investors might want to use the First data IPO price for an attractive entry point into First Data.

First data IPO As mentioned in the Tech IPO news weekly, Payment processing company, First Data, is reportedly planning to IPO by the end of this year, seeking to raise $2.5B. First data has the biggest merchants’ network in the payment processing market, with approximately 6 million business locations and more than 4,000 financial institutions in 118 countries worldwide. First Data provides essential financial services in three business lines:

Global Business Solution (‘GBS’) – provides retail point-of-sale and e-commerce services that include mobile payments, web-store solutions, and cloud-based, point-of-sale operating system.

Global Financial Solutions (‘GFS’) – provides credit solutions for bank and non-bank issuers. Services include retail private-label cards, financial software systems, and lending solutions.

Network and Security Solutions (‘NSS’) – provides value-added solutions, such as electronic funds transfer, network solutions, debit card processing solutions, security and fraud solutions, mobile wallets support, and more.

The company is a financial sector veteran that was founded back in 1971 and was fully acquired by American Express (NYSE:AXP) in 1983. Nine years later, First Data IPO was held, spinning-off the company from American Express. Three years after that in 1995, the company merged with First Financial Management Corp and absorbed Western Union (NYSE:WU) that was later spun-off from First Data in 2006. Leading investment firm Kohlberg Kravis Roberts (NYSE:KKR) acquired First Data for $30B, which was financed with $24B of debt and took the company private.