September 13, 2011

Equifax Inc. 

 

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Two of the Company’s more promising new products that launched in 2010 include Undisclosed Debt 

Monitoring and Equifax Complete. Undisclosed Debt Monitoring is the industry’s first platform to monitor and 

notify lenders of new account activity from the time a borrower applies for a mortgage until it is closed, while 

Equifax Complete is a three in one credit report that contains 24/7 access to credit scores from the three major 

reporting agencies.  

As part of the Company’s Decision 360 initiatives, Equifax has also been investing heavily to link all of 

its databases (IXI, the Work Number, NCTUE+, credit etc.) with the goal of gaining further insight on its 

customers (assessing a consumers’ willingness, ability and capacity to pay). Importantly, EFX believes that 

linking all of the databases will allow the Company to develop more products faster and more cost effectively 

than it was able to do historically. As of June 30, 2011 management said that it is generating revenue from 13 

different product offerings that were built leveraging the Company’s multiple data assets.  

Investment in Unique Data Sources – Opportunity to Further Leverage EFX Databases 

A key component of Equifax’s growth strategy is to invest in and acquire sources of credit and non-

credit information to enhance the variety and quality of the Company’s services while increasing customers’ 

confidence in information-based business decisions. Areas of focus for investment in new sources of data 

include, among others, positive payment data, real estate data and new commercial business data. The 

following reviews recent investments/acquisitions to further the Company’s unique data sources strategy: 

Acquisitions - IXI Corporation and Workload 

During 2009, EFX paid $124 million to acquire IXI Corporation, a company with U.S. consumer data 

related to employment and financial assets, which broadens types of services EFX offers its customers. At the 

time of the acquisition, IXI sourced its data from more than 95 leading banks, brokerage firms and other 

financial entities. The Company’s IXI database is the most comprehensive database of invested and deposited 

consumer wealth in the U.S. IXI directly measures data on more than $10 trillion in U.S. consumer assets and 

investments, representing more than 42 percent of all U.S. consumer invested assets.  

During the second quarter of 2011, Equifax paid $31 million to acquire Workload Financial Business 

Consultants, a U.K. company that has a database of consumer deposit, savings and investment information. 

The transaction puts the Company in a stronger position by offering customers better insights on ability to pay, 

a major focus of customers and UK regulators. Data providers include life insurance companies, fund 

managers, pension providers and retail banks (data is similar to the IXI database but at the product level vs. 

the individual account). The data are updated quarterly and are aggregated at the postal code level. Equifax 

intends to utilize the workload data to develop a suite of products similar to what IXI has developed in the U.S. 

To accomplish its ambitions, Equifax has re-located a key executive from IXI to the U.K.  

National Consumer Telecommunications Utilities Exchange NCTUE+ Database 

Equifax recently built a positive payment database to complement its existing negative payment 

database, which dates to the mid 1990s. While a typical credit database contains only negative data (missed or 

late payments etc.) a positive database provides information about those consumers that have a history of 

paying their bills on times. Having a positive payment database is strategically important for Equifax as it 

includes data on a large group of consumers that are not included in the negative database. In early 2011, 

Equifax stated that its positive database had over 1 billion positive data records on 140 million unique 

consumers. Notably, 20% of consumers in the NCTUE+ database are not included in the consumer credit 

database or have insufficient credit to develop a credit score. Equifax’s NCTUE+ database is the only 

significant positive non-financial database in the U.S. giving the Company a significant competitive advantage 

in our view. The NCTUE+ database was launched in early 2011 and the Company recently stated that it is 

generating very strong customer demand and that installations and commitments were ahead of the 

Company’s expectations.  

 

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Equifax Inc. 

 

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Emerging Markets Hold Significant Potential – Opportunity to Increase Exposure 

In our view, Equifax is positioned well in emerging market countries that are poised to experience an 

expanding middle class. At present, the Company has attractive equity interests in Brazil, Russia and India. We 

believe the growing middle class populations in these countries will be increasingly utilizing financial products 

and services. According to the chart below, consumers in Russia, Brazil and India plan to significantly increase 

their use of financing for future property and vehicle purchases. 

Property Financing and Plans for Financing 

Vehicle Financing and Plans for Financing 

Source: Credit Suisse Emerging Consumer Survey, January 2011 

Importantly, the Company should be able to boost its equity interests in Brazil and Russia over time, 

potentially taking a controlling stake in these businesses in those countries down the road. The following 

summarizes the Company’s investments in Brazil, Russia and India: 

Brazil 

As we noted above, in May 2011, Equifax combined its credit operations in Brazil with Boa Vista 

Services (BVS) in exchange for a 15% equity interest. We view the transaction favorably as the combined 

entity is now a formidable competitor in that country with a number 2 position in both commercial and 

consumer credit operations (prior to the merger Equifax was a distant number 3 in the consumer business and 

held a number 2 market share in the commercial business). Importantly, Equifax will have the opportunity to 

increase its stake in BVS in a couple of ways. First, Equifax’s ownership of BVS could expand if it provides 

funding to BVS to make acquisitions, which it has committed to do as part of the transaction. The Company 

could also increase its interest by buying out BVS’ other owners. Equifax has the right of first refusal to buy its 

partners’ stakes if they decide to sell. It should be noted that ~21% of BVS is owned by a Brazilian private 

equity firm (TMG Partners) while the remaining interests are split among four Brazilian based organizations 

with Associacao Comercial de Sao Paulo (ACSP) being the largest with a ~59% stake. 

Russia 

On June 30, 2008, as a part of the Company’s long-term growth strategy of entering new geographies, 

Equifax acquired a 28 percent (increased to 33% in 2Q11) equity interest in Global Payments Credit 

Services LLC, or GPCS, a credit information company in Russia. The Company paid $4.4 million for its stake 

GPCS, which is now doing business as Equifax Credit Services, LLC in Russia. Under the shareholders’ 

agreement, Equifax has the option to acquire up to an additional 22 percent interest in GPCS between 2011 

and 2013.  

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