First Data Corp. is reorganizing its international division as part of an effort to unite the company into a single global organization that can develop and deliver products faster.
David G. Yates, the president of First Data International, which generated $415 million in revenue during last year's third quarter, is to leave the company at the end of the month, and the division's responsibilities will be split among two lines of business — financial services and retail and alliance services.
Financial services is to give global support to issuers of credit and debit cards, and the unit will establish and operate automated teller machine networks. Retail and alliance services is to oversee merchant alliances and sign merchant acquiring agreements globally, Chip Swearngan, a company spokesman, said Friday.
Aaron McPherson, the research director for payments at IDC Financial Insights, said he believes Kohlberg Kravis Roberts & Co., First Data's New York, owner, is preparing First Data for an initial public offering.
"This is what KKR does. It invests in a company, and eventually KKR wants to get back its investment," he said. "First Data will have to streamline the organization and cut costs to simplify the infrastructure in preparation for a sale.
An independent international division would make the IPO more difficult."
Kohlberg Kravis bought First Data in April 2007 for $29 billion in one of the largest leveraged buyouts ever.
"For a company of our size an IPO has always been a potential exit strategy for our equity holders," Swearngan said. "At this stage we have nothing to announce."
International growth was a key priority last year at First Data. In November, the company signed an ATM deployment agreement with Turk Ekonomi Bankaski in Istanbul to create a network comprising 1,250 ATMs during the next three years throughout Turkey. It also agreed in August to buy CashAxcess, a South African ATM deployer, from Mvelaserve Ltd. in Cape Town. CashAxcess supplies third-party ATM services to the region's banks.
In early January, First Data formed a merchant-acquiring alliance with ICICI Bank, India's largest private bank based on assets. ICICI Merchant Services, 81% owned by First Data and 19% owned by the Mumbai financial company, is to build on the bank's acquiring portfolio of about 150,000 merchants.
Yates' responsibilities are to be turned over to First Data regional managers. Yates joined First Data in 2004 and became president of its international division in 2007; he worked in London and Frankfurt.
First Data is eliminating his post, but the company is keeping both offices open, said Swearngan, the spokesman.