Exclusive: Silver Lake hires banks for Mercury Payment IPO

The IPO could come in the first half of 2014 and value the Durango, Colorado-based payment processing company at up to $2.5 billion, including debt, said one source, who asked not be identified because the matter is confidential.

Representatives of Silver Lake and Mercury did not immediately respond to requests for comment. JPMorgan, Barclays and Morgan Stanley declined to comment.

The appointment of IPO underwriters at Mercury followed similar discussions between Square Inc, the payment start-up co-founded and headed by Twitter Inc’s Jack Dorsey, and banks about a possible stock market flotation.

Founded in 2001, Mercury quickly grew to become one of the five largest, non-bank payment processors in the United States, as measured by the number of transactions. The company targets small and medium-sized merchants, such as restaurants and stores, with cheaper credit card payment solutions.

The company’s annual revenues rose to $203.3 million in 2012 from $79 million in 2009, according to Inc, a monthly publication focused on fast-growing companies.

Silver Lake acquired a roughly 60 percent stake in Mercury in 2010 for an undisclosed amount, leaving founders Marc Katz and Jeffrey Katz and existing investor Larry Stone, owning the remainder.

The payments industry is highly competitive. In May, WorldPay, a payment processing company owned by buyout firms Bain Capital LLC and Advent International Corp, dropped efforts to sell its U.S. unit amid skepticism from potential buyers over its profit projections.

Soyoung Kim and Greg Roumeliotis are reporters for Reuters News in New York