Blank check company FinTech Acquisition Corp. (NASDAQ: FNTC) will acquire CardConnect for $180 million in cash and $170 million in FNTC common stock. CardConnect is currently majority owned by San Francisco and New York-based growth equity firm FTV Capital.
CardConnect offers unique, full service payments platforms for both small and midsize business and enterprises through a comprehensive product portfolio. The merged company will be renamed CardConnect Corp. and will apply to continue the listing of its common stock on NASDAQ under the symbol CCN.
The cash portion of the deal will be funded by a combination of cash held in trust by FNTC, borrowings under a new $100 million first lien credit facility and a $40 million second lien secured credit facility, and $30 million in equity financing. FNTC will also repay approximately $62 million in debt outstanding under CardConnect’s existing credit facility upon closing of the merger.
“CardConnect is a profitable, growing business that has attracted an impressive blue chip customer base,” said FNTC chairman and matriarch of her Philadelphia-based family’s business empire, Betsy Z. Cohen.
“CEO Jeff Shanahan and his proven team have continued to leverage technology to deliver innovative, state-of-the-art payments capabilities featuring advanced transaction security and outstanding customer service. With numerous Fortune 500 companies as well as over 60,000 small and mid-sized merchants already on its platform, CardConnect is well positioned to continue its growth by consistently meeting the demanding challenges of today’s rapidly evolving payments industry,” she added
“We are very excited to be partnering with Betsy and FNTC in a transaction that provides an efficient path for a successful transformation to a public company,” said CardConnect president and CEO Jeff Shanahan.
“We have been consistently impressed with the way Jeff and his team have executed within the complex payments landscape to build one of the most successful payments platforms in the U.S. We look forward to our continuing role with CardConnect as the company enters this exciting next phase of growth,” said FTV Capital partner Chris Winship.
Along with Betsy Cohen, FTV managing partner Richard Garman, and partner Chris Winship, will serve on the CardConnect board of directors. Garman and Winship have been serving on CardConnect’s board since 2010 when FTV initially invested in the company.
The merger is expected to close in June 2016, pending FNTC stockholder approval, the receipt of proceeds from the proposed financing activities and other customary closing conditions. Post transaction, the CardConnect management team will continue to lead the company.
Piper Jaffray & Co. acted as M&A Advisor to FNTC; Cantor Fitzgerald & Co. acted as Capital Markets Advisor to FNTC; and Ledgewood acted as legal counsel to FNTC. Financial Technology Partners LP and FTP Securities LLC served as exclusive strategic and financial advisor to CardConnect in this transaction. Kirkland & Ellis LLP acted as legal counsel to CardConnect.
FinTech Acquisition Corp. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. In February 2015, FNTC consummated a $100 million NASDAQ IPO. Simultaneously, FNTC raised $3 million in a private placement. The company was founded in 2013 and is based in New York, N.Y.
Daniel Gideon Cohen, the older son of FNTC chairman Betsy Cohen, is FNTC’s CEO and president since 2014. When she was 32, Ms. Cohen founded Jefferson Bank, and built it into the largest bank headquartered in Philadelphia. She sold the bank in 2000 for $350 million and founded The Bancorp Inc. in nearby Wilmington, Del. Daniel G. Cohen is also vice chairman, president and CEO of Institutional Financial Markets, Inc. since 2013, and chairman of The Bancorp Inc. since its inception. He also served as the CEO of IFMI, LLC and its subsidiary, Cohen & Company Securities, LLC, a securities brokerage firm, from 2001 until 2006. He previously served as CEO of RAIT Financial Trust (NYSE: RAS), a real estate finance company focused on the commercial real estate industry, from December 2006 when it merged with Taberna Realty Finance Trust. to February 2009.
“They grew up in business families, where finding customers and getting paid was dinner-table talk – Edward E. Cohen, son of a North Philadelphia paperhanging contractor, and Betsy Zubrow, daughter of a West Philly neighborhood doctor. They were Penn Law students when they married in 1965,” wrote the Philadelphia Inquirer. “So it’s not surprising the couple and sons Daniel and Jonathan have built a collection of companies. Or that they’ve listed more than a dozen firms on stock exchanges. What’s unusual is the scope of the enterprises – the mix of energy (the Atlas group of companies), real estate (the Resource companies), and finance (fast-growing Bancorp Bank, the former Jefferson Bank, a string of small investment banks) – that have helped the Cohens finance projects as diverse as Walnut Street restaurants, Wall Street mortgage bonds, and Marcellus Shale natural gas wells.”
FTV Capital is a growth equity investment firm that has raised over $1.8 billion since inception to invest in high-growth companies offering a range of innovative solutions across three sectors: enterprise technology and services, financial services, and payments and transaction processing. FTV’s experienced team leverages its domain expertise and proven track record in each of these sectors to help motivated management teams accelerate growth. FTV also provides companies with access to its Global Partner Network, a group of the world’s leading enterprises and executives who have helped FTV portfolio companies for more than a decade. Founded in 1998, FTV Capital has invested in 90 portfolio companies, including payments companies such as CardConnect, CashStar, Clearent, WePay, FleetOne (acquired by Wright Express), Verus (acquired by Sage), and MedSynergies (acquired by Optum, part of United HealthGroup). FTV has offices in San Francisco and New York.
Photo credit: Two generations of Cohen family entrepreneurs: (from left) Daniel Cohen, mother Betsy Z. Cohen, Jonathan Cohen, and father Edward E. Cohen in their Rittenhouse Square offices (Feb. 2014). (philly.com; Ed Hille / Staff Photographer)