Toronto-based DH Corporation (“D+H”) (TSX: DH) has entered into a definitive agreement to acquire Fundtech, a leading provider of global payments and transaction banking software, from private equity firm GTCR, for cash consideration of US$1.25 billion.
Headquartered in New York, Fundtech is a leading global provider of mission-critical software that facilitates payment processing, cash management, and financial messaging products for financial institutions and corporate customers. Fundtech’s flagship next generation payment hub software provides leading money center banks with the ability to achieve enhanced payment efficiency, cost effectiveness, visibility and compliance by operating global payment functionality through a single software instance. Fundtech has approximately 1,600 total staff with operations in 19 countries and a blue-chip customer base of 1,200 clients that includes many of the world’s leading financial institutions.
In 2011, GTCR had acquired a controlling interest in Fundtech, which has offices in Herzliya, Israel, from Clal Industries, a subsidiary of IDB Development (TASE:IDBD), for $388 million. As part of the transaction, GCTR had partnered with Fundtech founder and CEO Reuven Ben Menachem to facilitate the transformational merger of Fundtech Ltd. (NASDAQ: FNDT) and Bankserv Inc. In the process, GTCR took Fundtech private and completed the acquisition of privately-held Bankserv, a complementary provider of SaaS-based payments software. The combined company, with enhanced scale for innovation and global growth, became a leader in this growing and dynamic area of financial technology.
“The complexity of today’s global payments infrastructure, proliferation of channels, and an increasing desire for real-time payments is driving demand for payment solutions that allow banks to streamline payment processing while providing a more sophisticated and comprehensive view of liquidity management across various currencies and geographies,” said D+H chief executive officer Gerrard Schmid. “The acquisition of Fundtech puts D+H at the forefront of these trends globally, providing us with a market-leading software platform with established scale in mission-critical payment technology. It also delivers capabilities that are relevant to our existing customer base in Canada and the U.S. while making D+H more relevant to global financial institutions and large U.S. banks.”
“GTCR is proud to have supported Fundtech’s remarkable transformation and growth since the inception of our investment. We appreciate the ingenuity and hard work on the part of CEO Reuven Ben Menachem, President Ed Ho, CFO Karl Jaeger and other team members to build a truly exceptional company, with strong product innovation, a quality- and service-focused orientation, and global scale. We believe that the company is well-positioned to continue its success as a part of D+H,” said GTCR Managing Director Collin Roche.
“I am honored to have worked with so many talented and committed colleagues over the course of Fundtech’s journey from a start-up provider of payments software in 1993 into a global leader in mission critical transaction banking solutions in 2015,” said Mr. Ben Menachem. “Partnering with GTCR enabled us to complete a key, transformational step in this process; we combined two strong businesses, achieving enhanced profitability and market coverage, and we achieved the scale to sustain strong investment in development and innovation. I believe that, like the business combination that we executed with GTCR in 2011, the combination of Fundtech and D+H provides great opportunity for Fundtech’s customers, employees and other stakeholders.”
Aaron Cohen, Managing Director at GTCR, added: “This transaction marks another successful example of GTCR’s Leaders Strategy, as we worked in partnership with an exceptional management team to execute this complex transformational merger. We are pleased that those efforts have resulted in building a market-leader in transaction banking software.” Cohen continued: “Reuven Ben Menachem has been an excellent partner for GTCR and a visionary entrepreneur in building Fundtech. On behalf of GTCR, we’d like to thank him for his leadership as he enters the next phase of his career. We also extend our thanks and best wishes to Ed Ho and other managers and employees at Fundtech as they continue working with D+H.”
The transaction is expected to close in the second quarter upon the receipt of regulatory approvals and other customary conditions. Barclays and RBC Capital Markets, LLC served as Fundtech’s financial advisors, and Kirkland & Ellis LLP provided legal counsel.
D+H (TSX: DH) is a leading financial technology provider the world’s financial institutions rely on every day to help them grow and succeed. Its lending, payments and enterprise solutions are trusted by nearly 7,000 banks, specialty lenders, community banks, credit unions and governments. Headquartered in Toronto, Canada, D+H has more than 4,000 employees worldwide who are passionate about partnering with clients to create forward-thinking solutions that fit their needs. With annual revenues of more than $1 billion, D+H is recognized as one of the world’s top FinTech companies on IDC Financial Insights FinTech Rankings and American Banker’s FinTech Forward ranking.
Founded in 1980, GTCR is a leading private equity firm focused on investing in growth companies in the Financial Services & Technology, Healthcare and Information Services & Technology industries. The Chicago-based firm pioneered The Leaders Strategy – finding and partnering with management leaders in core domains to identify, acquire and build market-leading companies through transformational acquisitions and organic growth. Since its inception, GTCR has invested more than $10 billion in over 200 companies.