FIS, GTCR craft Worldpay escape hatch

In its recent sale of an ownership stake in Worldpay, FIS agreed that the new joint venture with GTCR could be put up for sale a handful of years after they close the deal

Last week, Fidelity National Information Services, better known as FIS, said it would sell a 55% majority stake in its Worldpay business to the private equity firm GTCR for $11.7 billion, according to their July 6 press release. The transaction values Worldpay at $17.5 billion and allows FIS to skip the spin-off of Worldpay that it had previously been contemplating.

FIS and GTCR have yet to hash out the specific terms of the limited liability company agreement that will govern the new Worldpay joint venture and expect to do so over the next year before the deal closes. But in the meantime, they spelled out their general terms for the LLC in the SEC filing this week.

While each of the companies will have the option to force that sale four years from whenever the deal closes, those options will lapse after another two years, according to the filing.

“Each of FIS and Purchaser will have the right to require the JV to consummate an initial public offering (“IPO”) or sale transaction after the fourth anniversary of the Closing,” the filing said. That right is subject to certain conditions, but the “requirements will fall away following the sixth anniversary of the Closing.

Private equity firms like GTCR typically create ten-year investment funds, raising the money at the beginning to provide capital to invest and then acquiring assets to be sold, either to other companies or through an initial public offering, over the next ten years. Chicago-based GTCR raised firm closed on a $11.5 billion fund in May, contributing to its $35 billion under management.

If GTCR doesn’t follow through on the plan to acquire the ownership stake in Worldpay, under certain circumstances, there may be a hefty sum to be paid for that change of events. Under the terms of the agreement, GTCR will be required to wire $770 million to FIS within three days if the deal falls apart.

By Lynne Marek on July 13, 2023
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