Payments processor First Data, purchased by private equity firm KKR in 2007 for $29.8 billion through a leveraged buyout, recently filed a registration with the SEC for an initial public offering.
Ultimately, First Data looks ready for a second public life. First Data is expected to bring about a turnaround after going public, giving KKR the opportunity to cash in on its investment. The IPO should help alleviate the company’s debt burden, enabling improved cash flow and profitability, thereby helping First Data compete more effectively. The challenge in this latest phase will be to disrupt, not be disrupted.
It is no surprise that First Data has struggled under its debt load (KKR financed the deal with more than $20 billion of debt) for several years under a succession of CEOs. High interest rates made it difficult for First Data to dig itself out of debt.