Credit card processor First Data Corp. has received a fresh round of funding totaling $1.2bn from its buyout firm KKR & Co., as the payments firm continues to struggle to reach IPO.
This is the biggest funds injection since KKR acquired First Data seven years ago for roughly $26bn in one of the largest-ever private-equity buyouts. It has been refinancing the company’s heavy debt load since then to ease pressure, reports The Wall Street Journal.
The current infusion round involves equity as part of a $3.5bn investment that includes $2bn from pension funds, mutual funds, asset managers and wealthy individuals.
Out of the total amount, $500m will come from KKR’s fund that did the original buyout and another $700m from its own cash, or balance sheet, the firm said. It also added that this latest round will enable First Data to reduce its annual interest payments on debt by $375m.
KKR has not been able to sell First Data as it has a huge debt load, which the firm has not been able to shed.
As reported in Wall Street Journal, First Data has till now paid just under $2bn in annual interest expenses, and more than $600m in the first three months of 2014. It has not posted any profits since 2007, though its losses have comparatively come down.
First Data employs about 23,000 people and processes credit-card and debit-card payments for merchants and banks.