FILE PHOTO: U.S. 100 dollar notes are seen at a bank in this picture illustration in Seoul on September 20, 2011. REUTERS/Lee Jae-Won/File Photo
NEW YORK (Reuters) - Private equity firm GTCR is poised to garner a return of about two times its investment in Worldpay, after the sale of its 55% stake in the payments processor to Global Payments, people familiar with the matter said on Thursday.
Such a big windfall has become increasingly rare in the private equity industry, which has been starved of large exits during the last two years when high interest rates froze up financing markets and slowed down the pace of large leveraged buyouts.
Earlier on Thursday, Global Payments agreed to buy Worldpay for around $24.25 billion and divest its issuer services unit for $13.5 billion in a complex three-way deal, marking one of the biggest transactions in the payments industry in recent years.
The 100% return on the capital invested by GTCR was based on its 2023 deal for the stake in Worldpay - the buyout firm's largest ever acquisition - in a transaction that valued the business at about $18.5 billion.
GTCR declined to comment on its returns from the deal.
The potential returns could increase further, given that GTCR is taking 41% of its share of the Worldpay purchase price in Global Payments stock, which will give it a 15% stake in the Atlanta-based company following the closing of the deal in early 2026.
"These are the types of deals which show the value of private equity. We took a business that was doing well, recruited a world class management team led by an industry luminary, Charles (Drucker, CEO of Worldpay), invested heavily in new products, technology and a clear strategy, and drove accelerated growth to make it attractive to the point where a large strategic could come in and buy it," said Aaron Cohen, head of financial services & technology at GTCR, in an interview.
Cohen said the buyout firm is betting on the further potential upside from strategic changes at Worldpay by the management team led by Drucker, and from Global Payments' strategy for the combined company.
Under GTCR's brief majority ownership, Worldpay launched new products and grew at a faster clip of about 6%, compared to 1-2% previously, Cohen said.
The Worldpay deal marks GTCR's second big exit over the past year, after it clinched a deal to sell insurance brokerage AssuredPartners to Arthur J Gallagher for $13.45 billion in December. GTCR, which jointly owned AssuredPartners with Apax Partners, earned around 2.5 times its original investment in the company that was made in 2019, Reuters has previously reported.
Such large deals have gained greater significance in recent years, due to the asset management industry's struggles to offload bets made during the boom years of the late-2010s and the earlier part of this decade.
The speed of the exit, announced less than 15 months since GTCR closed its original Worldpay stake acquisition, stands out at a time when private equity firms have been forced to hold onto their investments for longer periods.
The median average hold period for a private equity investment is around 5.8 years, according to a report published this week by data provider PitchBook.
(Reporting by Milana Vinn and David French in New York; Editing by Anirban Sen and Chizu Nomiyama)
