Fifth Third closes sale of stake in unit

Fifth Third Bancorp said Tuesday it has closed on a deal announced three months ago to sell a 51 percent stake in its payments-processing business to global buyout firm Advent International.

Cincinnati-based Fifth Third will retain a 49 percent stake in the new company, Fifth Third Processing Solutions LLC, which is valued at $2.35 billion, before any adjustments. The unit processes electronic payments such as debit, credit and merchant transactions.

Advent paid $561 million in cash for its majority stake in the unit. Advent is a global buyout firm with offices in 15 countries, and North American operations based in Boston.

Fifth Third said it will recognize a pretax gain of about $1.7 billion, or $1 billion after taxes, on the transaction.

The deal is expected to boost the regional bank's Tier 1 common equity _ a common way to measure a bank's financial health _ by about $1.2 billion.

The sale of a majority stake in the unit is one in a series of steps Fifth Third has taken recently to raise capital so it can repay taxpayer funds extended under the government's programs to bolster banks' financial health.

Fifth Third Processing Solutions will be capitalized, in part, by senior secured notes totaling $1.25 billion. Those notes will be payable to subsidiaries of Fifth Third. Fifth Third will also receive warrants from the new entity.

When the transaction was announced March 30, Fifth Third said it expected the deal to close during the second quarter _ Tuesday was the quarter's final day.

The deal's closure was announced after shares of Fifth Third rose 3 cents to close at $7.10.