Fidelity National Financial Plans $500 Million IPO in Spinoff of Noninsurance Operations

Strategic Insights -

Fidelity National Financial Inc., a Jacksonville, Fla.-based company, plans to undertake a $500 million initial public offering (IPO) as part of a spinoff of its noninsurance operations into a separate publicly traded company. The spinoff, which will result in the formation of Fidelity National Information Services Inc. (FIS), aims to allow Fidelity National Financial to concentrate on its title insurance business. The new company will use about $250 million from the IPO to pay dividends to Fidelity National Financial, while the parent company will use the money to pay down debt.

The spinoff is expected to enable Fidelity National Financial to focus on its leading market position in the title insurance industry and grow its specialty insurance businesses. Fidelity National Information Services will consist of three primary segments: Financial Institution Software and Services, Lender Outsourcing Solutions, and Information Products and Services. The company will be a leading provider of technology solutions, processing services, and information-based products and services to the financial services and real estate industries.

Key Takeaways:

  • Fidelity National Financial plans a $500 million initial public offering as part of a spinoff of its noninsurance operations.
  • The spinoff will allow Fidelity National Financial to focus on its title insurance business and specialty insurance businesses.
  • Fidelity National Information Services will consist of three primary segments: Financial Institution Software and Services, Lender Outsourcing Solutions, and Information Products and Services.
  • The new company will use about $250 million from the IPO to pay dividends to Fidelity National Financial.
  • Fidelity National Financial will use the money to pay down debt.
  • The spinoff is expected to position Fidelity National Information Services for future growth and provide a separate, publicly traded currency.
  • Fidelity National Financial has a leading market position in the title insurance industry and aims to grow its specialty insurance businesses.
  • Fidelity National Information Services will offer technology solutions, processing services, and information-based products and services to the financial services and real estate industries.
  • Over 2,400 financial institutions use FIS products and services, including 45 of the 50 largest banks in the United States.
  • FIS processes nearly 50% of all U.S. residential mortgage volume and over 235 million deposit accounts and nonmortgage consumer loans and leases.

Statistics:

  • Fidelity National Financial plans to undertake a $500 million IPO.
  • About $250 million from the IPO will be used to pay dividends to Fidelity National Financial.
  • Fidelity National Financial plans to use the money to pay down debt.
  • FIS saw its first-quarter 2004 net earnings rise to $47.3 million, from $18.5 million, for first-quarter 2003.
  • Total revenue for the first quarter was $538.5 million, compared with $234.4 million, for the year ago period.

Sources:

  • A. M. Best via COMTEX
  • Fidelity National Financial Inc.
  • U.S. Securities and Exchange Commission (SEC)
  • COMTEX (http://www.comtexnews.com)