First Data raises $3.5 billion, substantially reduces debt load

Credit card processing firm First Data and subsidiary of American multinational private equity firm KKR Co. announced it has recently

Credit card processing firm First Data and subsidiary of American multinational private equity firm KKR & Co. announced it has recently raised $3.5 billion in equity, sourcing primarily from new investors.

According to First Data’s announcement made last Thursday, June 19th 2014, the majority of the new equity with $2 billion originating from a “diverse group of pension funds, mutual funds, asset managers and wealthy individuals.” KKR was responsible for bringing in $1.2 billion of the capitol raise, with $300 million coming from previous investors.

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The news comes as a sign of relief for First Data and KKR & Co, as since the payment firm was acquired by KKR back in 2007, has been in the red every year. According to First Data the new investments come as a sign of confidence in its future growth, and will eventually result in annual interest savings topping $375 million.

“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,” stated First Data CEO, Frank Bisignano.

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Frank Bisignano was appointed CEO this last spring, with intentions reducing the then current debt load. Since the announcement First Data has $1 billion on its balance sheet as a result of the capitol raise.

“We are pleased to be joined by several investors who saw, as we do, that Frank’s team is able to successfully combine First Data’s existing unique assets with cutting-edge technology that we believe will take the company to the next level in the months and years ahead,” said Henry Kravis,  co-CEO and co-chairman of KKR.

According to report by The Wall Street Journal, the motivation of reducing the company’s debt is the result of preparations for a potential IPO later this year, or in early 2015.

 

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