Financial Technology Industry Update December 2012

Transcription

1 Integrity Expertise Results John Hill (813) John McDonald (813) Keith Hodgdon Senior Vice President (813) Financial Technology Industry Update December 2012 Jeffrey Bridge Vice President (813) Michael Mariani (813) Jennifer Paul (813) Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL Tel: Member FINRA/SIPC

2 FINANCIAL TECHNOLOGY Industry Update 140% 120% Commentary As of December 18, 2012, the public market performance of the Financial Technology industry s sectors was strong over the past 12 months. Software & Services (up 23%) and Processing & Outsourced Services (up 22%) both outperformed the S&P 500. As detailed in the table on the right, the Financial Technology industry remains active as a number of venture and growth equity investments from institutional investors were announced and/or completed during the 2 nd half of Several notable transactions involved mobile Point-of-Sale ( POS ) solutions providers, such as the recently completed growth equity investment of $200 million into Square, Inc. from a consortium of investors including Starbucks Corp. and Citi Ventures and a $10 million investment into ShopKeep.com, Inc. led by Canaan Partners. Stock Price Performance (LTM) 22.9% 21.5% Select Venture and Growth Equity Investments Closed Date Target Lead Investor Equity Investment Intacct Corp. Bessemer Venture Partners / Emergence Capital Partners / Sigma Partners / Split Rock Partners / Sutter Hill Ventures $8 FiftyOne, Inc. Paydiant, Inc. Adams Street Partners / Delta Ventures / On- Line Ventures / Pitango Venture Capital / Vintage Investment Partners / VSP Capital North Bridge Venture Partners / General Catalyst Partners / Stage 1 Ventures Mozido, LLC Undisclosed $19 12/05/12 CloudPay SolutionS, Ltd. Rho Capital Partners, Inc. $16 12/05/12 ShopKeep.com, Inc. Canaan Partners $10 11/30/12 Cardfree, Inc. 11/29/12 Xero, Ltd. Jeffrey Katz / Snapfinger / Restaurant Sciences Matrix Capital Management Co. / Valar Ventures 11/14/12 Factor Systems, Inc. Bain Capital Ventures $25 10/30/12 The Rainmaker Group Ventures, LLC Norwest Venture Partners $34 10/23/12 izettle AB Greylock Partners / Northzone Ventures $31 10/17/12 Braintree Payment Solutions, LLC New Enterprise s $35 $13 $16 $10 $49 100% 20.0% 10/08/12 Genesis Financial Solutions, Inc. Endeavour Capital $25 09/17/12 Square, Inc. Starbucks Corp. / Rizvi Traverse Management / Citi Ventures 08/02/12 FiveStars, Inc. DCM / Lightspeed Venture Partners $14 $200 07/24/12 SecureNet Payment Systems, LLC Sterling Partners $18 80% Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 S&P 500 Processing & Outsourced Services Software & Services Source: S&P Capital IQ 07/18/12 Boom Financial Digicel Group, Ltd. $17 07/09/12 Stripe, Inc. General Catalyst Partners / Redpoint Ventures / Sequoia Capital $20 2

3 FINANCIAL TECHNOLOGY M&A Activity Select M&A Transactions Enterprise Enterprise Value / LTM Closed Date Target Business Description Buyer Value Revenue EBITDA TNS, Inc. Provides services that enable businesses to exchange information, trade financial data and transport payments. Trident Private Holdings I, LLC $ x 6.5x CSC Credit Services, Inc. Operates as a consumer reporting agency in the Midwestern and Central United States. Equifax Information Services, LLC $1,000 NA NA Retalix, Ltd. Offers a portfolio of software solutions in the areas of store and sales channels, merchandising and enterprise level chain management, and supply chain execution/logistics. NCR Corp. $ x 25.5x LML Payment Systems, Inc. Provides electronic payment, risk management, and authentication services to customers that use Internet to receive or send payments. Digital River, Inc. $72 2.1x 6.3x BancTec, Inc. Provides business process outsourcing solutions for financial transaction automation and document management applications. TransCentra, Inc. $154 NA NA JetPay Solutions, LLC Operates as a front-end and back-end credit card and check processing solutions for the e- commerce and card-not-present marketplace. Universal Business Payment Solutions Acquisition Corp. $50 2.9x 11.9x 12/12/12 Accurate Group, LLC Provides national real estate transaction services to the financial services industry. ABS Capital Partners $55 NA NA 11/30/12 Mortech, Inc. Provides Web-based mortgage software solutions for mortgage bankers and secondary market teams. Zillow, Inc. $17 NA NA 11/23/12 Serasa S.A.* Operates as an economic, and financial analysis and information company in Brazil. Experian plc $5, x NA 11/01/12 Reverse Mortgage Solutions, Inc. Provides reverse mortgage loan servicing, sub-servicing, and loan origination software, as well as client specific reverse mortgage solutions. Walter Investment Management Corp. $120 NA NA 10/25/12 Genpact, Ltd.* Provides business process and technology management services worldwide. Bain Capital $3, x 10.1x 10/16/12 T-Chek Systems, Inc. Provides business-to-business spend management and payment processing services. Electronic Funds Source, LLC $ x NA 10/04/12 FleetOne, LLC Provides fuel cards and fleet-related payment solutions to businesses and government agencies with vehicles in the United States. Wright Express Corp. $ x NA 10/02/12 Zephyr s, Inc. Provides investment analysis software to financial professionals worldwide. Informa Investment Solutions, Inc. $62 NA NA 10/01/12 Spend Radar, LLC Develops spend analysis and spend management software. SciQuest, Inc. $18 NA NA 10/01/12 Accelerated Payment Technologies, Inc. Develops and supports payment technology solutions for businesses in a variety of markets. Global Payments, Inc. $413 NA NA Source: S&P Capital IQ. *Denotes acquisition of minority stake. 3

4 FINANCIAL TECHNOLOGY M&A Activity Select M&A Transactions Enterprise Enterprise Value / LTM Closed Date Target Business Description Buyer Value Revenue EBITDA 09/21/12 Empresa Brasileira de Sistemas Ltda. Provides accounting, business management and tax software. IOB Folhamatic Group $17 NA NA 09/13/12 Distra Pty, Ltd. 09/10/12 Adeptra, Ltd. Develops payments applications for payments processors, financial institutions, and other institutions operating in the payments chain in Australia and the United Kingdom. Provides automated contact and resolution services to consumer credit and risk management companies. ACI Worldwide, Inc. $49 NA NA Fair Isaac Software Holdings, Ltd. $ x NA 08/31/12 Merchant e-solutions, Inc. Provides payment solutions for financial institutions and merchants. Cielo SA $ x 11.0x 08/15/12 Fidelity National Information Services, Inc. (Healthcare Benefit Solutions Business) Offers benefits administration software service, multi-purse debit cards and transaction processing solutions for consumer directed healthcare ("CDH") accounts. Lightyear Capital $ x NA 07/25/12 LendingSpace Partners, LLC 06/25/12 IOB Folhamatic Group Provides Web-based mortgage loan origination software solutions to banks, mortgage companies, and other lending institutions. Develops integrated accounting and business management software solutions for Brazilian businesses. Lender Processing Services, Inc. $11 NA NA Sage Group plc $ x 23.3x 06/14/12 Venmo, Inc. Offers text messaging-based payments system. Braintree Payment Solutions, LLC $26 NA NA 01/31/12 2nd Story Software, Inc. Engages in the development and marketing of tax preparation software and Web-based services. InfoSpace, Inc. $ x 7.0x 01/31/12 Compliance 360, Inc. Provides software-as-a-service based governance, risk, and compliance software solutions. SAI Global, Ltd. $42 NA NA Average 3.6x 12.7x Median 3.1x 10.6x Source: S&P Capital IQ. 4

5 FINANCIAL TECHNOLOGY Recent M&A Transactions Profiled TNS, Inc. (NYSE:TNS) Founded in 1990, TNS, Inc. (NYSE:TNS) is a leading provider of data communications and interoperability solutions. TNS s service offerings enable businesses to exchange information, trade financial data and transport payments. On December 11, 2012 Trident Private Holdings I ( Trident ), an investor group led by Siris Capital Group, entered into a definitive agreement to acquire all of the outstanding shares of common stock of TNS for approximately $528 million or an offer price per share of $ Upon completion of the transaction, TNS will become a private company, wholly owned by Trident. The purchase price implied attractive multiples of revenue (1.5x) and EBITDA (6.5x) and represented a considerable premium (44%) to TNS s stock price one-day prior to the announcement and to the 52-week average (14%). Retalix, Ltd. (NasdaqGS:RTLX) Transaction Details Financial Profile Transaction Analysis LTM Income Statement 9/30/12 Purchase Price (Equity) $528.2 Revenue $553.2 Net Debt $308.7 EBITDA $129.9 Total Rights / Options / Warrants $7.3 Net Income $14.7 Implied Enterprise Value $844.3 As of Balance Sheet 9/30/12 Implied LTM Purchase Multiples Cash $39.5 Revenue 1.5x Debt $348.2 EBITDA 6.5x Net Debt $308.7 Net Income 35.9x Transaction Details Headquartered in Ra anana, Isreal, Retalix, Ltd. (NasdaqGS:RTLX) is a leading global provider of innovative software and services to high volume, high complexity retailers. Retalix s software and services are deployed in over 70,000 retail locations that transact billions of dollars in annual sales across its platform.. On November 28, 2012 NCR, Corp. (NYSE:NCR), a leading provider of products and services that enable businesses to connect, interact and transact with their customers worldwide, announced that it had entered into a definitive agreement to acquire Retalix for approximately $741 million. The purchase price implied attractive multiples of revenue (2.3x) and EBITDA (25.5x) and represented a considerable premium (37%) to TNS s stock price one-day prior to the announcement and to the 52-week average (122%). Source: S&P Capital IQ. Financial Profile Transaction Analysis LTM Income Statement 9/30/12 Purchase Price (Equity) $741.4 Revenue $266.9 Net Debt ($133.1) EBITDA $24.1 Minority Interest $5.2 Net Income $13.9 Implied Enterprise Value $613.5 As of Balance Sheet 9/30/12 Implied LTM Purchase Multiples Cash $133.1 Revenue 2.3x Debt $0.0 EBITDA 25.5x Net Debt ($133.1) Net Income 53.2x 5

6 FINANCIAL TECHNOLOGY Public Company Analysis ($ in millions, except per share data) Processing & Outsourced Services Enterprise Value / Equity Value / Closing Price % of 52 Equity Enterprise LTM 9/30/2012 LTM Margins LTM LTM 9/30/2012 Company Ticker 12/18/12 Week High Value Value Revenue Gross Profit EBITDA Net Income Book Value Gross Profit EBITDA Net Income Revenue EBITDA Net Income Book Value Automatic Data Processing, Inc. ADP $ % $28,303 $27,609 $10,807 $5,349 $2,364 $1,391 $6, % 21.9% 12.9% 2.6x 11.7x 20.3x 4.5x Fidelity National Information Services, Inc. FIS $ % $10,427 $14,539 $5,889 $1,883 $1,718 $442 $6, % 29.2% 7.5% 2.5x 8.5x 23.6x 1.5x Fiserv, Inc. FISV $ % $10,996 $14,138 $4,487 $1,884 $1,366 $575 $3, % 30.4% 12.8% 3.2x 10.4x 19.1x 3.4x Paychex, Inc. PAYX $ % $12,340 $11,949 $2,245 $1,564 $960 $552 $1, % 42.8% 24.6% 5.3x 12.4x 22.3x 7.5x NCR Corp. NCR $ % $4,117 $5,065 $5,841 $1,345 $446 $157 $1, % 7.6% 2.7% 0.9x 11.4x 26.2x 4.0x Total System Services, Inc. TSS $ % $4,177 $4,115 $1,864 $595 $469 $243 $1, % 25.2% 13.1% 2.2x 8.8x 17.2x 2.9x VeriFone Systems, Inc. PAY $ % $3,180 $4,071 $1,866 $774 $398 $65 $1, % 21.3% 3.5% 2.2x 10.2x 48.9x 2.4x Genpact, Ltd. G $ % $3,603 $3,959 $1,837 $721 $325 $186 $1, % 17.7% 10.1% 2.2x 12.2x 19.4x 3.1x SEI Investments Co. SEIC $ % $3,974 $3,594 $957 $697 $223 $195 $1, % 23.3% 20.3% 3.8x 16.1x 20.4x 3.6x CoreLogic, Inc. CLGX $ % $2,823 $3,451 $1,503 $606 $295 $75 $1, % 19.6% 5.0% 2.3x 11.7x 37.4x 2.5x Global Payments, Inc. GPN $ % $3,532 $3,367 $2,251 $1,454 $486 $171 $1, % 21.6% 7.6% 1.5x 6.9x 20.7x 2.8x Jack Henry & s, Inc. JKHY $ % $3,407 $3,316 $1,050 $435 $341 $161 $1, % 32.5% 15.3% 3.2x 9.7x 21.2x 3.4x Broadridge Financial Solutions, Inc. BR $ % $2,970 $3,283 $2,323 $601 $343 $125 $ % 14.8% 5.4% 1.4x 9.6x 23.7x 3.8x Moneygram International, Inc. MGI $ % $894 $1,986 $1,309 $559 $272 ($66) ($164) 42.7% 20.8% (5.1%) 1.5x 7.3x NM NM Euronet Worldwide, Inc. EEFT $ % $1,193 $1,267 $1,236 $276 $147 $45 $ % 11.9% 3.6% 1.0x 8.6x 26.8x 2.1x Heartland Payment Systems, Inc. HPY $ % $1,158 $1,184 $1,995 $268 $135 $62 $ % 6.7% 3.1% 0.6x 8.8x 18.6x 4.7x Average 88% $6,068 $6,681 $2,966 $1,188 $643 $274 $1, % 21.7% 8.9% 2.3x 10.3x 24.4x 3.5x Median 94% $3,567 $3,776 $1,930 $709 $371 $166 $1, % 21.5% 7.5% 2.2x 10.0x 21.2x 3.4x Software & Services Enterprise Value / Equity Value / Closing Price % of 52 Equity Enterprise LTM 9/30/2012 LTM Margins LTM LTM 9/30/2012 Company Ticker 12/18/12 Week High Value Value Revenue Gross Profit EBITDA Net Income Book Value Gross Profit EBITDA Net Income Revenue EBITDA Net Income Book Value Intuit, Inc. INTU $ % $18,106 $18,047 $4,223 $3,464 $1,416 $837 $2, % 33.5% 19.8% 4.3x 12.7x 21.6x 6.6x Equifax, Inc. EFX $ % $6,709 $7,434 $2,112 $1,298 $683 $300 $1, % 32.4% 14.2% 3.5x 10.9x 22.3x 3.6x ACI Worldwide, Inc. ACIW $ % $1,752 $2,061 $578 $381 $110 $23 $ % 19.1% 4.0% 3.6x 18.7x NM 3.7x Fair Isaac Corp. FICO $ % $1,492 $1,902 $676 $478 $195 $92 $ % 28.8% 13.6% 2.8x 9.8x 16.2x 3.1x Bankrate, Inc. RATE $ % $1,283 $1,406 $478 $330 $134 $43 $ % 28.1% 9.0% 2.9x 10.5x 29.8x 1.6x Bottomline Technologies, Inc. EPAY $ % $917 $810 $233 $127 $30 ($0) $ % 12.8% (0.0%) 3.5x 27.0x NM 2.9x Average 85% $5,043 $5,277 $1,383 $1,013 $428 $216 $1, % 25.8% 10.1% 3.4x 14.9x 22.5x 3.6x Median 90% $1,622 $1,982 $627 $430 $165 $68 $ % 28.5% 11.3% 3.5x 11.8x 22.0x 3.4x Source: S&P Capital IQ. 6

7 Integrity Expertise Results John Hill (813) Recent Transactions John McDonald (813) Keith Hodgdon Senior Vice President (813) has entered into an Agreement and Plan of Merger with and have been acquired by a subsidiary of DaVita HealthCare Partners, Inc. N. Harris Computer Corp. a subsidiary of Jeffrey Bridge Vice President bridge@hydeparkcapital.com (813) Southern Management Corp. has been recapitalized by Michael Mariani mariani@hydeparkcapital.com (813) with mezzanine financing from has been recapitalized by & & Harbert Mezzanine Partners ADG Acquisition Holdings, LLC Jennifer Paul paul@hydeparkcapital.com (813) Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL Tel: has acquired Member FINRA/SIPC