First Data Shakes Up International Division

First Data Corp. recently announced a shakeup of its international division as part of an effort to unite the company into a single global organization designed to develop and deliver products faster.

 David G. Yates, president of First Data International, which generates $1.7 billion in annual revenue, will leave the company at the end of the month, and the company will divide the division’s responsibilities into two lines of business­–financial services and retail and alliance services.
 
Financial services will provide global support for issuers of credit and debit cards, and the unit will establish and operate ATM networks. Retail and alliance services will oversee merchant alliances and will sign merchant-acquiring agreements globally, says Chip Swearngan, a company spokesperson.

 Kevin Schultz is president of the financial services division, and Edward Labry is president of retail and alliance services. The two executives are based in Atlanta, where First Data is based, Swearngan says.

Globalization enables First Data, which operates in 36 countries, to migrate to a single processing platform that will cut costs and deliver better service, Schultz says. Under Pam Patsley, president of First Data International from May 2002 to October 2007, the unit purchased a large number of companies with competing processing platforms.

 Aaron McPherson, research director for payments at Framingham, Mass.-based IDC Financial Insights, believes Kohlberg Kravis Roberts & Co., First Data’s New York-based owner, is prepping 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 says. “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.”

 “For a company of our size, an IPO has always been a potential exit strategy for our equity holders. At this stage we have nothing to announce,” Swearngan says.

 Kohlberg Kravis & Roberts purchased First Data Corp. in April 2007 for $29 billion, making the deal one of the largest leveraged buyouts ever.

 International growth was a key priority last year for First Data. In November, the company signed an ATM-deployment agreement (see story) with Turk Ekonomi Bankaski in Istanbul, Turkey, to create an ATM network comprising 1,250 ATMs over the next three years throughout the country. It also signed an agreement in August to purchase CashAxcess, a South Africa-based ATM deployer, from Mvelaserve Ltd., which is based in Cape Town. CashAxcess provides third-party ATM services for the region’s banks (see story).
 
And earlier this month, First Data formed a merchant-acquiring alliance (see story) with ICICI Bank, India’s largest private bank based on assets. ICICI Merchant Services, 81% owned by First Data and 19% owned by Mumbai-based ICICI, will build on the bank’s acquiring portfolio of approximately 150,000 merchants.

Yates’ responsibilities will be turned over to First Data’s managers, who have responsibility for overseeing activities in the Asia/Pacific, Latin America/Canada and Europe Middle East Africa regions. Yates, who joined First Data in 2004 and became president of the international unit in 2007, worked out of offices in London and Frankfurt, Germany. 

First Data is eliminating his position, but the company is keeping both offices open, Schultz says.