By Shasha Dai OF DOW JONES LBOWIRE VeriFone Systems Inc., a publicly traded electronic payment company that has had two private equity owners in the past decade, is making several acquisitions every year these days and providing a potential avenue for liquidity to private equity and venture capital firms, according to VeriFone Chief Executive Douglas G. Bergeron. The San Jose, Calif., company, which provides technology that processes debit card, credit card, smart card and other types of electronic payment at points of sale, reached an agreement in November for payment processor Hypercom Corp. in an all-stock transaction valued at $485 million. The deal, expected to be completed in the second half of this year, will significantly expand VeriFone's European presence, among other things, according to a company statement. When that deal closes, VeriFone will have largely filled out its geographic portfolio, Bergeron said. But that doesn't mean VeriFone is done with acquisitions. In fact, the company is making five to six deals every year, with each ranging from a few million to $700 million, he said. The purchases will help round out VeriFone's product offering. For instance, the company is looking at businesses that "technically enable acceptance of not only cell phone payment but also intelligent checkout," said Bergeron. "The upgrading of payment-acceptance systems will involve smarter, intelligent checkout," he said. In that regard, some venture capital-backed companies are among potential targets, Bergeron said. Other companies VeriFone is considering provide services such as encryption that are "wrapped around" point-of-sale payment systems, he said. Organically, the company is well positioned to benefit from growth in emerging markets, which are "in the first or second inning of electronic payment," Bergeron said. In the developed market, revenue growth is also accelerating in part because cellphone payment is picking up. "We generate a lot of cash flow and have access to debt that we can use from time to time," Bergeron said. "We look at a lot of stuff that makes sense, and we could offer exit[s] for private-equity firms." Bergeron had experience with financial sponsors in the past. In 2001, he teamed with Gores Group LLC -- then known as Gores Technology Group LLC -- to acquire VeriFone from Hewlett-Packard Co. for $50 million. A year later, Gores sold VeriFone to GTCR LLC for $160 million. The Chicago firm received a dividend in 2004 and took VeriFone public in 2005. Since then, GTCR had sold down its holding, with the last piece offloaded in 2010. In total, VeriFone generated 14.6 times GTCR's equity investment in an eight-year period, according to Bergeron. (Dow Jones LBOWire covers buyout and growth equity deals, as well as private-equity fund-raising and other news of interest to the private-equity community.) By Shasha Dai, Dow Jones LBOWire; Shasha.Dai@dowjones.com
