FIS to Sell Majority Interest in Capco Consulting Business to Clayton, Dubilier & Rice

Tuesday, May 23, 2017

Key facts:

  • Capco to become an independent company.
  • FIS will receive cash proceeds of $477 million.
  • CD&R to acquire 60 percent equity interest; FIS to retain 40 percent.

FIS™ (NYSE: FIS), a global leader in financial services technology, and Clayton, Dubilier & Rice (CD&R) today announced a definitive agreement in which FIS will sell a majority ownership stake in Capco to CD&R, establishing Capco as an independent company.

FIS will sell approximately 60 percent equity interest in its Capco business to CD&R funds and receive net cash proceeds of $477 million. Upon closing, FIS will also retain approximately 40 percent equity interest in the business. The transaction, which includes other consulting-related assets, is expected to close by early third quarter, subject to required regulatory approvals and customary closing conditions.

Capco, the public brand for FIS’ management consulting offering, is a global consulting organization specializing in business, digital and technology consulting services for the financial services industry. Upon closing, Capco will become a privately held company operating under the Capco name. CD&R Operating Partner Russ Fradin, the former chief executive officer (CEO) of SunGard, will serve as Chairman of the independent Capco company. Lance Levy will continue to serve as Capco CEO.

“CD&R’s investment will enhance Capco’s ability to grow and expand its market offerings while maintaining its market leading transformation services,” said Gary Norcross, president and chief executive officer, FIS. “FIS’ ongoing minority ownership enables our clients to continue to benefit from the relationship, while we focus investment on our IP-led solutions.”

“We are pleased to be partnering with FIS and to support and invest in Capco as a dynamic and highly-respected independent enterprise,” said CD&R Operating Partner Russ Fradin. “Capco’s many underlying strengths, which include a highly skilled team of consultants, a passion for problem solving and delivering value to clients, and a reputation for exceptional service, provide a solid foundation for continued success.”

“As an independent enterprise, we will remain laser focused on delivering the highest levels of service and value to our clients,” said Capco CEO Lance Levy. “CD&R’s investment and support is a big win for us — they will accelerate the expansion of our market offerings and coverage, and will provide Capco access to business insights and skills to drive the next phase of our growth.”

FIS expected the consulting business to contribute $0.11 — $0.12 to second half 2017 adjusted EPS and anticipates cash proceeds, net of taxes and deal-related expenses, of approximately $445 million.

Centerview Partners LLC acted as financial advisor to FIS. Willkie Farr & Gallagher LLP served as FIS’ legal advisors in the transaction. CD&R has obtained committed financing from Barclays; Credit Suisse; BMO Capital Markets; HSBC Securities (USA) INC. and HSBC Bank USA, National Association; and Natixis, New York Branch. Barclays, BMO Capital Markets, Credit Suisse, HSBC Securities (USA) INC., and Peter J. Solomon Company, an affiliate of Natixis, acted as financial advisors to CD&R. Debevoise & Plimpton LLP served as CD&R’s legal advisor in the transaction.