Politics & MoneyMortgage

Fiserv selling majority share in servicing business to Warburg Pincus for $395 million

Will maintain loan origination platform

Last year, Fiserv, a provider of financial services technology solutions, grew its offerings by acquiring two businesses: Monitise, a London-based provider of financial services technology, and PCLender, a provider of internet-based mortgage solutions for community banks and credit unions.

According to Fiserv, the acquisition of PCLender was designed to “enhance the Fiserv suite of mortgage origination services.”

Now, just a few months later, it appears that Fiserv is shifting its focus to mortgage origination, as the company announced Wednesday that it is selling a majority share in its mortgage servicing business to private equity firm Warburg Pincus for $395 million.

According to the company, it reached a definitive agreement with Warburg Pincus that will see the funds affiliated with Warburg Pincus will acquire a 55% share of Fiserv’s Lending Solutions business, which includes all of the company’s automotive loan origination and servicing products as well as its LoanServ mortgage and consumer loan servicing platform.

Fiserv expects to receive approximately $395 million in net after-tax proceeds for the sale. Fiserv will retain a 45% equity interest in the business.

Going forward, the lending solutions business will operate as a joint venture between Warburg Pincus and Fiserv.

The business will continue under the leadership of Bret Leech, currently the president of Fiserv Lending Solutions, and will focus on “delivering a market-leading lending experience through innovative, borrower-centric technology and processing solutions,” the company said.

Fiserv will retain its Secure Lending product for e-contracting and its UniFi mortgage origination solution.

“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’s president and chief executive officer, said. “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.”

The companies also expect the relationship to support the growth of the lending solutions business.

“We are pleased to partner with Fiserv and the Lending Solutions leadership team on this new joint venture, which brings together two leading businesses that provide mission-critical solutions to a growing and attractive client base,” said Jim Neary, managing director, Warburg Pincus. “We see meaningful opportunity to further build this business into a leading platform in automotive and mortgage lending technology.”

The deal is expected to close in the first quarter of 2018.

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