The activist investor ValueAct Capital Management has been awarded a seat on the board of Fiserv as part of a settlement with the financial technology and payments firm.
Fiserv said in a statement it had appointed Dylan Haggart, ValueAct partner, to its board and plans to nominate him at the company’s next annual general meeting as part of the agreement.
ValueAct first disclosed a stake in Fiserv in August, and said at the time it believed the company’s Clover credit card processing business could be worth $185 billion itself by 2024, or more than three times Fiserv’s current market value of $61 billion.
ValuAct said in a recent letter to investors that while Clover competitor Block (formerly Square) invented the sort of cloud-based, point-of-sale technology Clover uses, Clover is now the “market’s undisputed leader.” That is because Clover has been able to tap into Fiserv’s customer base and preexisting distribution channels.
Clover now has annualized transactions of roughly $185 billion, or 20% more than Block, and about $1.5 billion in annualized revenue, or about 2.5 times what its competitor Toast is producing, according to the letter.
“Fiserv’s opportunity is relatively straightforward: develop great products that match the disruptors’ capabilities and sell these into its huge customer base,” ValueAct said in the letter, a copy of which was reviewed by Bloomberg. The firm said it had increased its position in the company to $1.3 billion.
ValueAct compared the investment to similar ones it has made at Adobe, Microsoft and Seagate Technology Holdings.
“The theme of incumbent technology companies transforming themselves is not new to ValueAct,” the firm said, adding that its experience in the boardroom at each of the other companies has given it a blueprint for Fiserv.
“We believe Fiserv must do the same by continuing to aggressively invest in Clover and by transforming the rest of their franchise in a similar manner,” it added, arguing that doing so over time will result in the company’s multiple more accurately reflecting its intrinsic value.
It’s the second board seat in a week that ValueAct, which is run by Mason Morfit, has been awarded in a settlement. ValueAct said in a regulatory filing Friday that Andrew Baum had been appointed to the board of Insight Enterprises as part of a settlement agreement.
