Private equity firms Centerbridge Partners and Bridgeport Partners today announced plans to buy publicly traded Computer Services, Inc. (CSI), a provider of payments processing and regulatory compliance services, for $1.6 billion in an all-cash deal, demonstrating that the regtech sector is resilient to economic headwinds. The deal, which comes out to $58 per share of CSI’s common stock, was announced by CSI CEO David Culbertson. He said that it would allow the business to carry out “strategic objectives” to “grow and diversify” its numerous product offerings.
CSI may not be a well-known brand. However, the company’s website in Paducah, Kentucky, claims that it has been in some capacity since 1965, just before it started running a databank processing facility in Madisonville. CSI established a network of data centres during the 1980s, started selling its first PC software, and created what it believes to be one of the first online ATM systems. In more recent years, CSI has introduced solutions related to business analytics and corporate risk management, as well as a mobile banking solution.
Nearly 2,600 clients and more than 1,100 staff are reportedly part of CSI’s current global workforce.
“CSI has a reputation for being a pioneer in innovation and customer service for more than 57 years. As owners and operators, Centerbridge and Bridgeport have extensive knowledge in the technology and financial services industries, according to a news statement from Culbertson.
According to Centerbridge and Bridgeport, CSI shareholders would get a 53% premium over CSI’s closing stock price as of August 19 if the acquisition is approved by shareholders and authorities as they anticipate in Q4 2022. The proposal to take CSI private was accepted by the board of directors with a unanimous vote; after the transaction, its shares will no longer be traded publicly.
Frank Martire, the creator of Bridgeport, said in a statement, “I am happy to have this chance to join with Centerbridge on the purchase of CSI, a firm that I have carefully studied for decades and have admired as a genuine pioneer in financial services and technology.” “CSI has long been renowned for its devotion to its customers, workers, partners, and the communities it serves—a reputation that Centerbridge and Bridgeport are dedicated to upholding as we work with David and his team to pursue the company’s growth goals.”
Fintechs continue to draw a significant part of investment capital, notwithstanding the compliance perspective. According to CB Insights, venture capital firms spent $28.8 billion, or $1 out of every $5 invested, into fintech and cryptocurrency businesses in Q1 2022. VCs invested $132.5 billion in the industry last year, more than twice as much as they did in 2020 ($49 billion).
However, there are indications of some turbulence approaching. According to a more recent CB Insights study, investments in fintech and regtech fell year over year in Q2 2022 due to worries about a potential recession as well as increasing interest rates and inflation and their effects on the financial services sector.
