Thursday , November 26, 2020

Merchant Acquirer Shift4 Payments Prices IPO Above Expected Range

Investors appear eager to buy stocks of payment-processing companies as evidenced Thursday by Shift4 Payments Inc. pricing its initial public offering at $23 per share, nearly 10% above the high end of the $19 to $21 range it had expected just days earlier.

Shift4’s shares opened late Friday morning on the New York Stock Exchange at $33.10, according to Yahoo! Finance, fully 44% above the IPO price. Just before noon Eastern time they were going for $33.21. Shares trade under the ticker symbol FOUR.

Allentown, Pa.-based Shift4 priced 15 million shares of Class A common stock in the IPO for gross proceeds of $345 million before underwriting expenses. The underwriters have a 30-day option to buy 2.25 million more common shares.

Concurrent with the IPO, Shift4 founder and chief executive Jared Isaacman has agreed to buy $100 million of Class C shares at the IPO price, less underwriting expenses. Shift4 has a three-tier ownership structure, and Isaacman and private-equity firm Searchlight Capital Partners L.P. will control about 96% the company’s voting power through their ownership of Class B and Class C shares.

Shift4 serves 66,000 merchants that generated $6 billion in payment volume in the first quarter. The increase in card and online payments spurred by the Covid-19 pandemic may be making Shift4’s industry even more attractive to investors, who analysts say like the recurring revenues processors generate.

“There has always been a big appetite from the investment community in terms of investing and/or acquiring payment-related players,” Jared Drieling, senior director of consulting and market intelligence at Omaha, Neb.-based The Strawhecker Group, says by email. “The tailwinds such as the shift to electronic from paper methods, and even more so now with the consumer shift to online, will make these electronic-payment companies—whether they be acquirers, and digitally focused fintech players—even more attractive and relevant.” 

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