Kohlberg Kravis Roberts on Tuesday hired Michael Capellas, one of the most high-profile US technology and telecommunications executives, to run First Data after the $26bn leveraged buy-out of the credit card processing group is completed.
Mr Capellas joins the ranks of top managers around the world who are choosing to run private equity-owned companies rather than publicly traded companies, which often offer less lucrative compensation.
KKR, which last week filed with US regulators to raise up to $1.25bn in an initial public offering, declined to comment on how much it would pay Mr Capellas.
The buy-out of First Data, which lies at the intersection of the technology and financial services industries, is the second-largest in this year’s dealmaking spree by KKR.
The deal is expected to close before the end of September. Before that, however, the company will have to complete the sale of $24bn in bonds and loans to finance the transaction amid doubts about the health of the credit markets.
KKR recruited Mr Capellas from Silver Lake Partners, a large US private equity firm focused on technology investments where he is a senior adviser. But Mr Capellas, 51, made his name in corporate America after running Compaq Computer from 1999 until its takeover by Hewlett-Packard and MCI, formerly WorldCom, until its acquisition by Verizon Communications in 2005.
“We are confident that he will deepen customer relationships, and his leadership will be characterised by the same excitement and passion for success that he brought to his previous companies,” said Scott Nuttall of KKR.
In taking the post of First Data chief executive, Mr Capellas will replace Henry “Ric” Duques, who announced he would retire within two years in late 2005.
First Data shares rose 0.1 per cent to $32.94 in morning trading Tuesday.
KKR agreed to pay $34 per share for First Data in early April, in a bet that the trend towards a greater use of credit cards and debit cards for everyday payments will continue. The First Data deal came on the heels of KKR’s $45bn planned acquisition of TXU, the Texas-based energy group, in partnership with TPG Capital.
Mr Capellas said: “I look forward to joining First Data at this pivotal time.”
KKR has resorted to recruiting highly paid executives to run its portfolio companies in the past. Most notably, a private equity consortium including KKR last year brought in David Calhoun, a high-ranking veteran of General Electric, to run Nielsen, the Dutch media research group, with an estimated $100m pay package.