Fiserv Inc. said Wednesday it plans to sell a majority stake in its lending unit to private equity firm Warburg Pincus LLC for $395 million.
The Brookfield, Wisconsin-based financial technology company will sell 55 percent of the Fiserv Lending Solutions unit and keep 45 percent, creating a joint venture that Fiserv said will strengthen service and innovation.
The joint venture will include all of the automotive loan origination and servicing products and related operations of Fiserv, as well as its LoanServ mortgage and consumer loan servicing platform. Fiserv will retain its Secure Lending product for e-contracting and its UniFi mortgage origination solution.
Fiserv noted that New York-based Warburg Pincus has expertise and a “track record in growing financial technology businesses of scale.”
The business will continue to be led by Bret Leech, president of Fiserv Lending Solutions, Fiserv said.
“Fiserv is committed to delivering value for clients, and we expect this partnership with Warburg Pincus to further enhance service and innovation across the lending marketplace,” Jeffery Yabuki, Fiserv president and chief executive officer, said in a statement. “In addition, we will continue to provide integration advantages to ensure that our collective clients get the best of both organizations to provide differentiated value for our clients, associates and shareholders.”
Fiserv said its lending business is a market leader in automotive lending origination technology, automotive lending servicing technology and process solutions, as well as comprehensive mortgage and consumer loan servicing solutions.
“We see meaningful opportunity to further build this business into a leading platform in automotive and mortgage lending technology,” Jim Neary, managing director of Warburg Pincus, said in a statement.
David Koning, an analyst who covers the financial technology industry for Milwaukee-based Robert W. Baird & Co., said the deal is “reasonably small,” but noted that lending has been a strong contributor to Fiserv’s financial segment.
In a research note Wednesday, Koning said “the $395 million sale price is in the ballpark of what we would expect, particularly on an after-tax basis.”
