In 2000, GTCR took the initiative to expand the firm’s financial technology investment beyond its historic focus in payments and banking. GTCR believed other high growth industry segments, such as the wireless industry, presented attractive investment opportunities. Through resourceful networking, GTCR was introduced to G. Edward Evans, an accomplished executive in the wireless industry. At the time, Mr. Evans was the President and COO of Dobson Communications, a large wireless company that had grown through a series of substantial acquisitions.
Mr. Evans shared GTCR’s enthusiasm for pursuing a financial technology investment in the wireless industry. He identified several companies that represented potential platforms for investment. The largest of these was Syniverse Technologies (then known as TSI Telecommunication Services), which at the time was owned by GTE. Syniverse was the leading wireless financial technology business, providing a variety of services to wireless carriers that involved the translation, clearing, messaging and processing of data related to wireless voice and data transactions. GTCR approached GTE on a proprietary basis, but initially GTE was unwilling to sell.
In the summer of 2001, Mr. Evans became aware that Verizon, formerly GTE, was considering a sale of the company. With the help of Mr. Evans’ insight and diligence, GTCR saw potential for significant revenue growth and cost savings not previously identified by Verizon management. GTCR believed value could be created through the successful carve-out of the business from Verizon, because Syniverse then would be able to work more closely with its customers who competed with Verizon.
GTCR closed the acquisition of Syniverse in February 2002. While near-term growth was challenged in the aftermath of September 11, GTCR believed the investment could achieve substantial cash-on-cash returns from debt paydown as a result of the company’s strong free cash flow. Furthermore, we believed Syniverse would participate in overall wireless voice services growth and in the proliferation of various data services then in their infancy.
Following closing, GTCR and management worked successfully to carve-out the company from Verizon, including transitioning operations out of Verizon data centers as well as transitioning certain Verizon back-office support. New functions were created for the standalone company and a new CFO was hired to oversee a more robust financial organization. At the same time, Mr. Evans and his team transformed the business’ operations by eliminating costs, reorganizing operations and shifting the company’s business development activities toward higher growth markets. By late 2003, Syniverse was achieving increased growth from new and existing services.
In late 2004, Syniverse acquired EDS Inter Operator Services (“IOS”). The acquisition strategically transformed Syniverse, in that the IOS business was Syniverse’s largest domestic competitor. The acquisition was also highly accretive, as the company was able to eliminate IOS’s duplicative fixed cost infrastructure. In the aftermath of this successful acquisition, Syniverse completed an IPO in February 2005. Subsequent to the IPO, Mr. Evans retired as CEO in December 2006, and Tony Holcombe assumed the CEO role. GTCR had recruited Mr. Holcombe to the board based on his successful experiences at National Processing, Ceridien and WebMD.
As a public company in which GTCR still had substantial ownership, Syniverse made another transformational acquisition. In April 2007, the company announced the carve-out acquisition of the European clearing operations of Billing Services Group (“BSG”). BSG was a business Syniverse and GTCR had pursued in the past, when it had been a unit of EDS. We worked closely with Syniverse management on the diligence, negotiation and integration plans for the complicated acquisition. The transaction allowed Syniverse to leverage its scale over a broader geography and added important technology and services to the Syniverse product portfolio. The acquisition also solidified Syniverse’s position competitively with a number of important global clients.