Kohlberg Kravis Roberts is leading a group of LP co-investors and institutions in a $3.5 billion equity investment in First Data, which will allow the KKR portfolio company to pay down a substantial portion of its $22.5 billion long-term debt load.
The $3.5 billion includes $1.5 billion from existing investors, and $2 billion from new investors, according to a statement. KKR will provide $500 million from its 2006 fund, and $700 million from its balance sheet. The balance will come from a coterie of new investors including pension funds, mutual funds, asset managers and ultra-high net worth individuals.
The transaction is expected to close next month.
KKR first acquired the payment processing company through a $7.2 billion club buyout in 2007. Since then, First Data has struggled with its tremendous long-term debt load, which its first quarter earnings report pegged at $22.5 billion. The company’s health has suffered from its obligations to lenders. First Data paid roughly $603 million in cash interest for the quarter ending 31 March.
KKR was carrying First Data at 0.8x cost as of 31 March, according to reports.
The company’s standing is said to have improved over the last year. The company claims new chairman and chief executive officer Frank Bisignano has “implemented a comprehensive shift in the company's vision for the future, corporate culture and client focus, transforming it from a payments processor to a collaborative solutions provider that partners with clients of all sizes”.
“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 KKR founder Henry Kravis in a statement. “Over the last year, the company has made great strides to solidify its role as a provider of solutions to its clients who span the globe.”