Leadership Newsle ter Financial Services & Technology Fall 2015
GTCR Firm Update
Since the firm’s inception in 1980, GTCR has partnered with management teams to build and transform growth businesses, investing over $12 billion in more than 200 companies. In January 2014, we closed GTCR Fund XI, the firm’s largest fund to date, with $3.85 billion of limited partner equity capital commitments. To date, we have made five investments in Fund XI.
Financial Services & Technology Group Update
GTCR's Financial Services & Technology group has stayed very busy in 2015: with the sale of three por folio companies, Premium Credit Limited, Fundtech and AssuredPartners; the pending sales of Ironshore and The Townsend Group; and the acquisition by Opus Global of Alacra, a provider of KYC compliance workflow so tware to financial institutions.
Industry Viewpoints
During the extended bull market since the Great Recession, “fintech” has become one of the ho test segments of the economy in terms of media and investor focus. The space has received intense media a tention and an influx of capital from venture capitalists and traditional strategic buyers looking to avoid falling behind the curve. Unlike many industries where wholesale technology changes can quickly upend a traditional landscape, financial services requires a more nuanced evolution of technological progress given heightened regulatory requirements, dependence on human capital and the need for trust in financial markets. Many new entrants in the fintech space (both companies and investors) have focused heavily on the “tech” and less on the “fin.” Unlike many new investors in the space, GTCR sees technology not as a separate subsector but as an integral part of financial services, and we have been investing behind the adoption of technology throughout the industry for over two decades. In this heated and competitive environment, GTCR has invested in companies that are not just technologically innovative but also critical to their clients and create a network that benefits the broader ecosystems in which they participate. Optimal Blue’s pricing and product eligibility hub sits at the center of a network of more than 1,500 mortgage originators and investors, providing real-time data that is critical for the mortgage origination infrastructure. Likewise, Callcredit is building a di ferentiated so tware- as-a-service (“SaaS”) suite of real-time consumer credit and fraud data and analytics products, as well as enhancing the delivery and workflow tools for those products with its Numero acquisition. Similarly, Opus provides third-party management and know-your- customer (“KYC”) solutions that are at the intersection of technology and regulatory trends and that provide clients with streamlined, centralized and auditable workflows related to critical compliance activities. Our two recent pla forms, RevSpring and Sage Payment Solutions, each take advantage of technology integrations into fast-growing but highly regulated end-markets, such as healthcare, to create a di ferentiated value proposition. In the last two years, GTCR capitalized on the valuation environment to successfully exit seven por folio companies. This environment creates unique challenges and opportunities for long- term investors. GTCR continues to seek investments across the financial services and technology landscape, and we believe our domain expertise and the GTCR Leaders Strategy™ will enable us to identify, execute and build upon these a tractive pla form opportunities.
Por folio Company Profiles
Callcredit Information Group, Leeds, England CEO: Mike Gordon Pla form Acquisition: February 2014
GTCR acquired Callcredit Information Group (“Callcredit”) in February 2014. Callcredit is a leading credit reference and data analytics provider to some of the UK’s largest financial institutions and organizations in the retail banking, consumer lending, insurance, telecom, utilities and public sectors, among others. The company provides innovative consumer data, so tware and analytics solutions to help businesses make smarter, more informed decisions throughout the customer life cycle. Callcredit is headquartered in Leeds, England, and employs approximately 1,150 professionals globally. In November 2014, the company hired Mike Gordon as CEO. Mr. Gordon was previously a senior executive at Fair Isaac Corp. (NYSE:FICO), with responsibility for all customer-facing functions.
Callcredit is well-positioned within its current market and equipped to continue its growth trajectory following the recent management transition by focusing on product innovation, distribution and the direct-to-consumer market. Callcredit continues to evaluate potential acquisitions and strategic partnerships.
Convergex, New York, NY CEO: Eric Noll Pla form Acquisition: October 2006 | Recent Divestiture: April 2013
GTCR partnered with The Bank of New York and senior managers from the bank to form BNY Convergex Group. Convergex is a leading institutional broker-dealer o fering execution services and financial technology products to traditional asset managers, hedge funds, broker-dealers, corporations and plan sponsors.
GTCR and management formed the company through a transformative merger: the simultaneous corporate carve-out of The Bank of New York’s agency execution firm and the acquisition of Eze Castle, a leading order-management system vendor. Subsequent to the initial transaction, GTCR and management executed on several other acquisitions to further extend the reach into securities trading technology for various asset classes. Convergex sold its so tware businesses in 2013 to TPG Capital and retained the institutional brokerage-related businesses.
In December 2013, Eric Noll joined the company as CEO. He previously served as executive vice president of transaction services at NASDAQ OMX. Ironshore, Hamilton, Bermuda CEO: Kevin Kelley Initial Investment: August 2009 | Exit: Announced May 2015
GTCR invested in Ironshore in 2009 to support new CEO Kevin Kelley’s plan to transform the company from a property catastrophe underwriter to a diversified specialty excess and surplus carrier. Mr. Kelley is an industry veteran and former 25- year CEO of Lexington, the successful excess and surplus subsidiary of AIG.
In May 2015, GTCR signed a definitive agreement to sell its remaining shares of Ironshore to Fosun International, a Chinese conglomerate with multiple insurance operations. The transaction is expected to close in the fourth quarter of 2015.
Opus Global, Palo Alto, CA CEO: Doug Bergeron Management Partnership: September 2013 | Pla form Acquisition: July 2014 | Recent Acquisition: September 2015
Opus Global was formed in September 2013 by GTCR in partnership with CEO Douglas Bergeron with the goal of assembling a risk and compliance company to serve Fortune 1000 corporations. Mr. Bergeron is the former CEO of VeriFone (NYSE:PAY), a prior GTCR por folio company. Opus completed its first acquisition in July 2014, acquiring Hiperos, a growing so tware-as-a-service (“SaaS”) solutions provider that enables large companies to monitor and manage third- party risks associated with vendors, suppliers, contractors and other third parties. In September 2015, Opus completed its second acquisition, acquiring Alacra, a provider of workflow applications that enable customers to integrate and manage business information from internal and third-party content databases. This so tware o fering supports compliance workflow and data management objectives associated with reference data, customer onboarding and know-your-customer (“KYC”) requirements. The transaction enabled Opus to add meaningful scale, grow its regulatory and compliance product o fering in a complementary space and expand its geographic footprint.
Opus continues to identify and evaluate acquisition opportunities in the risk and compliance spaces.
The Townsend Group, Cleveland, OH CEO: Terry Ahern Pla form Acquisition: November 2011 | Exit: Announced October 2015
Founded in 1983, The Townsend Group is a leading provider of global investment management and advisory services focused exclusively on real estate and real assets. Townsend serves a global institutional client base providing custom investment solutions to help meet the needs and objectives of its investment programs. Headquartered in Cleveland, Ohio, the firm has o fices in San Francisco, London and Hong Kong. Townsend provides services on behalf of regulatory assets under management of approximately $12.8 billion and provides advisory and/or consulting services to clients who have real estate/real estate allocations of approximately $170 billion.
In October 2015, the company signed a definitive agreement to be acquired by NorthStar Asset Management Group. The transaction is expected to close in the first quarter of 2016.
Recent Sale Activity In 2015, the FS&T team capitalized on fully valued equity markets, low interest rates and robust strategic and financial sponsor M&A activity with the sale or announced sale of five por folio companies.
Premium Credit Limited
» In February 2015, GTCR closed the sale of Premium Credit Limited to Cinven Partners LLP in a transaction valued at £462 million.
Fundtech
» In April 2015, GTCR closed the sale of Fundtech to DH Corporation (TSE:DH) in a transaction valued at approximately $1.25 billion.
Ironshore
» In May 2015, GTCR signed a definitive agreement to sell its remaining shares of Ironshore to Fosun International, a Chinese conglomerate with multiple insurance operations, in a transaction valued at approximately $2.5 billion. » The transaction is expected to close in the fourth quarter of 2015.
AssuredPartners
» In October 2015, GTCR closed the sale of AssuredPartners to Apax Partners in a transaction valued at approximately $1.7 billion.
The Townsend Group
» In October 2015, GTCR announced the sale of The Townsend Group to NorthStar Asset Management Group (NYSE:NSAM), a leading global real estate asset management firm, in a transaction valued at approximately $450 million. » The transaction is expected to close in the first quarter of 2016. Industry Viewpoints
The financial services and technology industry continues to benefit from multiple sector tailwinds that can create an a tractive investment environment in multiple sub-sectors. In many ways, these tailwinds were created or catalyzed by the great financial crisis of 2008. Increased regulatory scrutiny and intervention throughout the industry have driven a focus on governance, risk management and compliance. In order to address regulatory and compliance requirements while delivering enhanced services to customers, financial institutions, now more than ever, are turning to technology and outsourced services partners such as GTCR’s current and former por folio companies Callcredit, Hiperos, Alacra and Fundtech. Additionally, financial institutions are divesting businesses that do not meet regulatory or profitability thresholds, a trend that GTCR capitalized on with its acquisition of Premium Credit Limited, which was a carve-out from Bank of America of the leading insurance premium finance company in the UK and Ireland.
This shi t toward more regulation, greater transparency and enhanced consumer choices will continue to drive the need for services and technologies in government, risk and compliance, payments, asset management, insurance, capital markets, personal finance and specialty finance. GTCR continues to seek investments across the financial services and technology landscape, and we believe our domain expertise and the GTCR Leaders Strategy™ will enable us to identify, execute and build upon these a tractive pla form opportunities.
Por folio Company Update and Executive Snapshot GTCR’s por folio companies have been highly acquisitive over the firm’s history— approximately two-thirds of capital invested since 2000 has been in companies that completed at least one add-on acquisition. As this activity illustrates, we view inorganic growth as a strategy for value creation and therefore seek to develop robust and creative acquisition strategies. All of our active Financial Services & Technology businesses today are seeking and evaluating add-on acquisitions in this market environment. The GTCR FS&T team has been very active over the past few years. Below is a snapshot of our por folio and recent events:
Callcredit Credit reference and Mike Completed pla form acquisition and Information Group so tware solutions Gordon partnered with new CEO Mike Gordon
Brokerage and trading- Eric Noll Brought in new CEO Eric Noll and CFO Fred Convergex related services Arnold to re-energize company
Specialty P&C insurance Kevin Announced sale of company to Fosun Ironshore Kelley
Financial technology Doug Management start-up that completed the Bergeron acquisitions of Hiperos, a leading third-party Opus Global vendor management pla form, and Alacra, a KYC compliance workflow pla form
The Townsend Real estate asset Terry Announced sale of company to NorthStar Group management Ahern Asset Management Group
FS&T Team Update
Vice President Ma thew Denne t joined GTCR as a Vice President in 2015. Previously, he worked as an associate at TA Associates, a global growth equity firm based in Boston, and as an analyst in the Financial Institutions Group of Lehman Brothers and Barclays Capital. Ma t has an MBA from the Wharton School of Business and a BA in economics and humanities from Yale University.
Associate
Sebastian Garcia joined GTCR in 2015. Prior to joining GTCR, he worked as an investment banking analyst in the Financial Institutions Group at J.P. Morgan. Sebastian graduated cum laude from Harvard University with a BA in economics. Associate Preston Han joined GTCR in 2015. Prior to joining GTCR, he worked as an investment banking analyst in the Financial Institutions Group at Goldman Sachs. Preston graduated cum laude from Harvard University with a BA in economics.
FS&T Team Contact Information
Collin Roche Aaron Cohen Mike Hollander Managing Director Managing Director Principal 312.382.2214 312.382.2169 312.382.2068 collin.roche@gtcr.com [email protected] [email protected]
KJ McConnell Ma t Denne t Vice President Vice President 312.382.2244 312.382.2174 [email protected] ma thew.denne [email protected]
FS&T Investments Since 2005
AssuredPartners
Callcredit Information Group
Convergex
Fundtech
Ironshore
Land Lease Group
Opus Global
Palladian Financial
Premium Credit Limited PrivateBancorp
QFour Digital
Service Net
The Townsend Group
Triad
Zenta
This newsle ter is for informational purposes only. This newsle ter is not an o fer to sell or a solicitation of an o fer to buy an interest in any private fund sponsored by GTCR LLC (“GTCR”) or any of its a filiates, and was not prepared for existing or potential investors in such funds. This newsle ter may not be relied upon in any manner as legal, tax or investment advice, and is not to be used for any investment purpose whatsoever. GTCR assumes no responsibility or liability for, and expressly disclaims any obligation or undertaking to update, the information contained in this newsle ter.
For a complete list of all active and prior GTCR por folio companies, please visit .gtcr.com.
*This information represents the approximate number of pla form acquisitions and add-on acquisitions, and the aggregate purchase price associated with such acquisitions, completed by GTCR’s Financial Services & Technology Group since 2000, as of October 1, 2015. The actual amounts may exceed the amounts set forth above and, with respect to purchase price, include the amount paid by all investors in the applicable GTCR por folio company. This information is for illustrative purposes only and reflects investments that were made across multiple funds during di ferent economic cycles. This information does not relate to fund or por folio company performance. Please click here for a complete list of all active and prior GTCR por folio companies. See Terms of Use for important additional information.