FIS is to sell a 60% stake in its global consultancy unit Capco to private equity firm Clayton, Dubilier & Rice (CD&R) for $477 million, retaining a minority 40% interest in the business.
FIS has made a tidy profit having acquired Capco for $292 million in 2010, although the business has never sat easily within the tech vendor's core banking portfolio.
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. Lance Levy will continue in the role of Capco CEO.
Gary Norcross, president and chief executive officer, FIS, says: “FIS’ ongoing minority ownership enables our clients to continue to benefit from the relationship, while we focus investment on our IP-led solutions.”
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.
The deal comes as Capco sues its former UK boss Andrew Tarver for £145 million over allegations that he stole clients while acting as chief executive of innovation subsidiary Blue Rocket.
Capco alleges that Tarver's actions led to the closure of Bold Rocket, a startup ecosystem business it set up in an effort to diversify its operations and attract potential high-growth clients from outside the financial services industry.