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Press releases
Fiserv Sells DataTrac Back to Original Owner
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Fiserv Sells DataTrac Back to Original Owner
By Anthony Garritano
4 February 2008
National Mortgage News
Vol. 32, No. 18
(c) 2008 National Mortgage News and SourceMedia, Inc. All rights reserved.
SAN DIEGO -- In a consolidation play, Fiserv has sold Del Mar DataTrac Inc. to TVC Capital LLC here.
TVC is private equity fund focused on software acquisitions and investments. In an interesting twist, TVC owned Del Mar before it was sold to Fiserv almost two years ago. Jeb Spencer, managing partner of TVC previously served as Del Mar's executive chairman from 2003 to 2005, during which time the company's customer base more than tripled. Veteran company employee, Rob Katz, has rejoined Del Mar and will help lead the ownership transition. No further details about the sale were released.
"Our firm was the majority shareholder when the company was sold to Fiserv," Mr. Spencer told NMN. "We're familiar with the asset. We like the Del Mar business because it's been a leader in serving the small lender market. It got up to $8 million in revenue in 2006. Given that record, we jumped to acquire it back from Fiserv."
TVC expects that the acquisition will play well given current market conditions. "If you look at the market, we're talking to lenders that have too many loans and not enough staff to deal with it," noted Mr. Katz. "There's a mini refi boom going on with all the recent rate cuts. So, we'll transition this into a high-growth company again that is prepared to meet that demand."
For over 15 years, Del Mar DataTrac has been a provider of back-office lending software. Currently, Del Mar serves over 300 mortgage banking firms throughout the U.S. However, that number has fallen from close to 500 when the company was initially sold to Fiserv. "We really want to get it back on track," said Mr. Spencer. "When we were in charge the customer base tripled and we added significantly to the product base. I don't think any corporate parent could have handled what happened in the industry well. If we handled it the loss in revenue and customers would have been similar I'm sure. In deciding to sell DataTrac, Fiserv basically said we have to make some divestitures and they said this piece no longer fits them. We believe the industry hit a low and we think volume this year will be higher than Doug Duncan (chief economist) at the MBA is predicting. This application is quick to implement and use, which makes it very competitive."
More recently Fiserv also sold CredStar, based in Los Angeles with offices in Phoenix, Philadelphia and Arlington Heights, Ill., which helps mortgage lenders measure how creditworthy potential clients are. The company runs a webpage, WebStar, that lenders can log into to check consumers' credit scores.
In discussing the rationale behind the DataTrac sale, Tom Warsop, Fiserv president of the financial institutions group said in a prepared statement, "This divestiture further demonstrates Fiserv's focus on its core financial and insurance businesses and its Fiserv 2.0 goals of helping clients to achieve best-in-class status."
On the other hand, TVC expects to use its current VC fund to continue to acquire mortgage technology firms.
"We purchased all the assets and liabilities of Del Mar as part of this deal," said Mr. Spencer. "We now own all the assets. When we sold it we felt like we sold our adopted child. We believe in this company.
"Right now we're looking at the market opportunistically," he said. "A lot of vendors have hit on hard times and a number are for sale. We're looking at all their books. We invested a lot of money in Del Mar when we had it and we'll do that again. We'll look to acquire complimentary products so we won't look at another LOS.
"We're a $40 million private equity fund. We raised the fund in March of 2007. Since that time we've done five other VC deals and we'll be back in the market for more funds in six months. We're after niche solutions. "These niche players won't be the next [big thing], but a lot [of large companies] have passed on good mortgage deals because of the cyclical nature of the business," Mr. Spencer said. "We'll focus on these niche businesses that we know we can grow."
(C) 2008 National Mortgage News and SourceMedia, Inc. All Rights Reserved. http://www.nationalmortgagenews.com/ http://www.sourcemedia.com/
For more information, visit www.delmardb.com
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