Firm: Purepay Capital
Fund: Purepay Capital II
Target: $200M to $250M
A Columbus, Ohio-based buyout shop that invests exclusively in financial technology and payments processing companies has set its sights on raising a second fund of $200 million to $250 million.
Founded in 2006 by John Cullen and Steve Valachovic, both with consulting, entrepreneurial and operational backgrounds,
According to Director David Evans, whose background is in investment banking, the firm invests $5 million to $20 million to acquire small but mature platform companies generating anywhere from $1 million to $5 million in EBITDA. Over time Purepay Capital seeks to balance out the capital structure in its platform companies up to 50-50 equity to debt. From offices in Columbus, New York and Charlotte, N.C., its roughly 10 investment professionals look for opportunities anywhere in the United States and Canada. A typical holding period: five years.
Purepay Capital has bought all five of its companies in the last 10 months. Its latest two, not yet announced, are earmarked to be integrated with CybrCollect, a LaCrosse, Wisc.-based company that helps merchants and other clients recover losses from bounced checks. The Federal Reserve estimates that about one in 200 checks bounces, which in 2006 wound up totaling some 153 million checks.
The other two portfolio companies, acquired last year, provide payment processing software—Creditron in Toronto and Netvantage in Gaithersburg, Md.
With its first five portfolio companies, the firm considers itself to have launched consolidations in two of what it calls “sub-verticals”—check recovery (risk management conversion) and payment processing (receivables automation and remittance processing). Other markets the firm has its eye on include payroll benefits outsourcing, integrating billing and collections, outsourced lockboxes and pre-paid store cards.