First Data Holdings, the parent company of First Data Corp., has received commitments to purchase approximately $3.5 billion of its common equity in a private placement. The proceeds will be used to repay portions of the company’s debt and accelerate its ongoing transformation to become a solutions provider for clients.
The $3.5 billion includes $1.5 billion from existing investors and $2 billion from new investors. Global investment firm KKR, the owner of First Data Holdings, contributed approximately $1.2 billion, including $500 million from its 2006 Fund and $700 million from its balance sheet. If the transaction closes, KKR will have approximately $1 billion invested in First Data’s equity. The transaction is expected to close on or around July 11, 2014, and is subject to customary closing conditions.
“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,” said Frank Bisignano, Chairman and CEO of First Data. “The new investment will unlock $375 million per year to help us accelerate our transformation.”
First Data has shifted its primary business strategy from payment processing to providing collaborative solutions for clients of all sizes, according to a company press release. Throughout the company’s ongoing shift, it has launched a series of new commerce solutions such as the Clover Station, Perka and Insightics.