Payments Company Evertec May Seek a Private-Equity Buyer

The San Juan, P.R.-based company offers merchant acquiring and payments in 26 countries throughout Latin America. It processes roughly two billion transactions a year, according to the company website. Evertec employs more than 2,300 people.

In August, Evertec reported second-quarter adjusted earnings of 38 cents a share, above consensus estimates of 35 cents, according to George Mihalos, a Cowen senior analyst. Revenue in the second quarter dropped 3.8% to $118 million, which was still above the $110 million consensus estimates, Mihalos said in a note. Seventy-nine percent of Evertec’s revenue is sourced from Puerto Rico, he said.

In August, Bloomberg reported that Evertec was weighing strategic options, including a sale. Evertec could appeal to larger payments companies like Global Payments  or Fiserv , Bloomberg said. Evertec President and CEO Morgan “Mac” Schuessler is the former president of international at Global Payments.

The Evertec sale comes after a wave of consolidation among large payments companies. In 2019, several big payments companies merged. This included Fidelity National Information Services’s (FIS) $34 billion purchase of WorldPay, while Fiserv scooped up First Data for $22 billion. In addition, Global Payments bought TSYS for $21.5 billion last year. The consolidation trend was expected to continue in 2020, but the Covid-19 pandemic put mergers on hold.

Evertec isn’t expected to attract large payments companies, banking sources said, pointing to the company’s overexposure to the Puerto Rican market.

Evertec is more a provider of bank systems services, including ATM management and digital banking, one banker said. Business solutions, which include core bank processing and network management services, comprise 43% of Evertec’s business, while payment services are 38% and merchant acquiring is 19%, according to Evertec’s second-quarter investor presentation. Evertec was once part of Banco Popular, which sold a 51% stake in the company to Apollo Global Management (APO) in 2010. Evertec went public in 2013, raising $506 million.

Private equity, which has largely not been investing during the Covid-19 pandemic, may be interested. Several PE firms such as Blackstone Group , KKR , Hellman & Friedman, and GTCR are noted fintech and payments investors. Evertec has also been owned by private equity before. It’s unclear what price the company, which has a $2.45 billion market cap, would fetch. Evertec’s shares have rebounded since hitting a low of $20.28 in March and closed Thursday at $34.11.

Source: Barons