That Block Trade FIS Global Just Saw? It Was Likely SunGard's PE Investors

Avondale Partners said the recent block trades by Morgan Stanley on shares of Fidelity National Information Services (NYSE: FIS) were likely from SunGard's private equity holders.

According to Peter Heckmann, Avondale analyst, "Factset's Streetaccount is reporting Morgan Stanley priced a block trade of 7.6 million shares of FIS (about 2 percent of outstanding shares post SunGard merger) overnight. The trade was priced at $62.50 with a total trade value of $475 million."

"This is the second block trade in the stock since the November 30th closing of the SunGard Data Systems deal. On December 2nd, Factset's Streetaccount reported that Morgan Stanley priced a block trade of 7.6 million shares (about 2 percent of outstanding shares post SunGard merger) in FIS Global overnight. The trade was priced at $63.65 with a total trade value of $484 million."

Related Link: FIS Announced Resolution Dismissal Of Patent Infringement Claims

Valuation And Justification

"We believe the sellers of these blocks were likely comprised of one or more of SunGard's private equity owners (Silver Lake, Bain, Blackstone, KKR, Goldman Sachs, TPG, and Providence), who had received 44–45 million shares as partial consideration in the deal," the analyst said.

"Based on 12/31 filings, we estimate the seven private equity firms now own no more than 7 percent of the equity of FIS in the aggregate," Heckmann added.

On November 30, FIS's acquisition of SunGard Data Systems was completed for $9.1 billion (including the assumption of debt) and the analyst noted that the company is positioned for solid results in 2016 and 2017.

"To the extent FIS is able to meet or modestly exceed consensus forecasts (on relatively easy comps) over the next 2–3 quarters, we believe the multiple accorded the shares should move back closer to peers after dipping in 2015," Heckmann said.

The analyst maintained his Market Outperform rating and $75 price target on FIS stock, which was recently seen trading down 0.82 percent at $62.54.