The Cincinnati-based company, which processes more than 11.4 billion ATM and POS transactions and almost $400 billion in debit card and credit card sales each year, is seeking to raise $500 million through the sale of 29.4 million shares at $16-$18 each.
Vantiv plans to use the proceeds of the offering to pay down debt and reduce interest expenses. At the mid-point of its pricing range, Vantiv shares would have a price-to-sales ratio of 2.2X, in line with competitors like Fiserv (FISV) and Global Payments(GPN).
In addition to those companies, Vantiv faces competition on the merchant side from Bank of America(BAC), Chase Paymentechand First Data(FDC). In its financial institution service business, it also competes with First Data, Fiserv and also Visa(V).
If those competitors weren't daunting enough, new players to the field include PayPal and Google(GOOG). These companies have better name recognition among customers.
Vantiv though offers clients a single technology platform that it believes provides a competitive advantage. It can deliver new applications to its customers quickly and in large scale through this platform, which also makes its different products easy to connect to and use.
Once a division of Fifth Third Bank(FITB), Vantiv was spun off and launched as a joint venture between Fifth Third and Advent. It was only last year that the company changed its name from Fifth Third Processing to Vantiv.
In the opinion of IPO Desktop President Francis Gaskins: "Vantiv seems like a good buy at the price range mid-point to hold for a month or so after the 40-day analyst report quiet period ends."
The claim to fame for BATS is that it offers low-cost, rapid trade execution. It measures success in nanoseconds and leads its competitors. Speed, though, can't make up for the lack of trading volume of late. In fairness, trading volume for all the exchanges has fallen since the financial crisis, causing competition in the space to become fierce.
BATS does have a pricing advantage since it only has 170 employees and its revenue per employee is higher than the NYSE. Gaskins likes BATS because it owns its own technology, and thinks it looks like a buy, saying it might be "interesting" in the aftermarket.
Other deals for the week include ExactTarget(ET), which is hoping to raise $136 million and price its shares at the mid-point of $16. It's a cloud company that provides software that specializes in interactive marketing. Its revenues have increased, but so have the losses.
CaesarStone Sdot-Yam (CSTE) is a manufacturer of engineered quartz countertops. The company is seeking to raise $100 million, selling 6.7 million shares at $14-$16 each. The company has 20% of the U.S. countertop market. It's a leader, but it's a fragmented business dependent on the housing market.
Finally Vipshop Holdings (VIPS) is scheduled for a $106 million offering with shares seen pricing in a range of $8.50 to $10.50 each. The company is a China-based online discount retailer, and is following in the fine tradition of Chinese IPOs with confusing organizational structures. Gaskins suggests investors stay away from Vipshop.
--Written by Debra Borchardt in New York. March 21,2012
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