Back in 2008, payment processing was a somewhat sleepy sector of the financial services industry. Giants like Square and Stripe wouldn’t be born for another year, and Visa and MasterCard were only just becoming independent. Meanwhile, banks were in the grip of the financial crisis – too cash-strapped and distracted to focus on their underinvested payments businesses.
But at Advent, we observed a trend: consumers and businesses were shifting away from cash, both for convenience and because of the growth in ecommerce. It was clear that with the right business structure and strategic vision, the payments industry was poised for breakout success.
We were lucky to find a kindred spirit in Charles Drucker, who ran the payments unit at Fifth Third Bancorp – the fourth-largest merchant acquirer in the US, servicing some of the largest retailers in the country, as well as a valuable portfolio of small businesses who banked with Fifth Third. In March 2009, we struck a 51-49 joint venture to carve out Fifth Third Processing Solutions at a valuation of $2.35 billion. The transaction raised capital for the bank, while allowing it to retain a considerable stake in its payments business. For us, it was the beginning of a fruitful journey into a booming field and an early foray into a business that would come to define fintech.
Former CEO, Vantiv
Working with Drucker and his team, we developed a strategy to grow the new company, which we renamed Vantiv. While corporate clients provided a critical payment volume, we recognized the importance of reaching small merchants beyond those who banked with Fifth Third. We helped Vantiv grow its sales force despite the recession to target customers in both segments. Overall payment volume and per-transaction revenue both grew, and through M&A transactions, we increased Vantiv’s presence in both brick-and-mortar point-of-sale and ecommerce.
We helped Vantiv go public in 2012, and exited our position over the next two years. But our journey in digital payments was just beginning. In 2015, we took public another of our payment companies, Worldpay. Two years later, Vantiv acquired Worldpay in a $10 billion deal, and two years after that, Fidelity National Information Services acquired the combined company at a valuation of about $43 billion.
Our early investment in digital payments with Vantiv was a spark that ignited the sector’s growth. That value creation was made possible by Advent’s willingness to engage deeply in a subsector, roll up our sleeves to realize a complicated carve-out, and thoughtfully engage with a talented management team to help a business achieve growth at scale.
Advent’s current Tech team was not involved in this investment.