Shares in Atlanta-based First Data Corp. began trading publicly on Thursday after the payments processor launched the year’s biggest initial public offering.
But it wasn’t a rousing debut. Trading under the ticker FDC, shares hit the market at $16 and fell 25 cents to $15.75 in the first day — a day that saw the Dow Jones Industrials index rise more than 200 points.
The offering price, meanwhile, was below the $18-$20 range the company had expected earlier this month.
The result was a total value well below the $5 billion some had expected First Data to generate when it announced its IPO plans this summer, before the stock market faltered over concerns of economic turmoil in China and elsewhere.
Still, the $16 initial price translates into as much as $2.9 billion for First Data, making it the second largest IPO ever by a Georgia-based company.
The biggest: UPS’s $5.5 billion offering in the late 1990s.
“I think it’s a banner day for the Atlanta community,” said Barry McCarthy, First Data’s executive vice president of network and security solutions.
“Despite some of the global challenges … there was still appetite in the market to purchase 160 million shares,” he said. “It really is a major vote of confidence despite the headwinds.”
He said the deal will allow First Data to pay down billions in debt and cut interest expense by hundreds of millions annually. Majority owner Kohlberg Kravis Roberts didn’t sell any stock in the IPO, but could eventually benefit from the deal when it sells shares.
First Data, founded in 1971,had previously been publicly traded until leveraged buyout firm KKR bought it eight years ago for $29 billion. The deal loaded the company with $22 billion in debt just before the Great Recession, wiping out its once-hefty profits.
First Data plans to use more than $2 billion from the IPO’s proceeds to pay down its debt, which still totals about $21 billion.
First Data is the world’s largest processor of credit and debit card payments, handling over $1 trillion worth of transactions in the U.S. alone, or about 38 percent of card transactions.
The IPO promises to eventually put thousands of dollars in the pockets of First Data’s 23,000 employees, who were awarded 31 million shares ahead of the stock offering. Most can sell those shares after 180 days.
One of the biggest beneficiaries will be First Data’s chief executive since 2013, Frank Bisignano, who was awarded First Data shares and stock options ahead of the IPO that were then valued at $77 million.
After the first day of trading, they were worth more than $86 million.
First Data’s IPO hit the market in a slow year for public offerings. Grocery chain Albertsons also planned an offering this week but shelved it, at least temporarily.
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