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Loyalty Marketing Firm Augeo Sells Its Financial Institution Arm for $140M

St. Paul-based Augeo will invest money from the sale – to Lightyear Capital LLC – into other components of the business. In turn, the divested business arm will become a separate company, Augeo FI.

Loyalty Marketing Firm Augeo Sells Its Financial Institution Arm for $140M
Augeo CEO David Kristal

Augeo, a tech-driven loyalty marketing firm based in St. Paul, has sold off one-third of its business – the loyalty division for financial institutions – to private equity firm Lightyear Capital LLC for $140 million. The business arm will become an independent, Lightyear-owned company, Augeo FI, though it will continue working closely with Augeo.

“There’s a lot we can do to support each other’s growth and we’re very enthusiastic to do that in the coming weeks and months,” says Augeo CEO David Kristal.

Kristal notes the management team that led the business arm under Augeo will be the same team leading the new standalone Augeo FI company. The division’s current president Mike Knoop will become CEO of Augeo FI. On the flip side, Kristal will be on the board for the company.

No layoffs are involved in the transaction, says Kristal. In fact, he thinks it’s likely Lightyear will hire new people for Augeo FI. Additionally, staff will not have to make geographical changes, as they will continue to be based in Naperville, Illinois, where the Augeo business arm has long operated out of.

The divested division runs credit and debit card points programs and has been growing 30 percent on an annual basis.  To date, the business represents 30 percent of Augeo’s sales and, according to Kristal, was intentionally carved out as a separate entity to be sold off for capital.

Augeo’s financial institution division was much more independent than the other components of the company at large, which include employee recognition and rewards programs, customer loyalty, card-linking experiences, and more. Those components had much more overlap between them, Kristal says.

The money from the sale will allow Augeo to invest more heavily elsewhere in the company, although Kristol says there are no current plans as to where exactly the money will be dedicated.

“Just as we have an opportunity to accelerate our growth, so does the business that we’re selling,” says Kristal. “Oftentimes these things can be bittersweet, but in this case, we both actually significantly benefit.”

Mark F. Vassallo, managing partner of Lightyear agrees, noting that Lightyear is excited about the expansion opportunities for Augeo FI, particularly “as credit and debit transaction volume and rewards card usage continue to rise.”

Augeo has posted 35 percent compounded annual growth for over a decade, and Kristal expects that as Augeo FI takes off on its own, Augeo’s own growth will only continue.

“It’s a proud moment for our company. We’ve just been very heads down on growth and innovation and so to be recognized this way – it’s a wonderful tribute to our team and what we’ve accomplished,” says Kristal. “The next leg of our journey begins today.”

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