Technology, Media & Telecommunications
Technology, Media & Telecommunications Team Update
GTCR was active throughout 2012 and 2013, completing more than 90 acquisitions across the Technology, Media & Telecommunications, Financial Services & Technology and Healthcare industries. From our inception in 1980, GTCR has partnered with management teams to build and transform growth businesses, having invested more than $10 billion in more than 200 companies. In 2014, we closed GTCR Fund XI, the firm’s largest fund to date, with $3.85 billion of limited partner equity capital commitments.
Since our last Leadership Report in September 2012, the GTCR Technology, Media & Telecommunications (“TMT”) team has made two new platform investments: NewWave Communications and Avention.* We have also completed 11 add-on acquisitions at six portfolio companies and have been active in the capital markets. In total, we have invested more than $150 million of GTCR capital in the TMT sector since September 2012.
In addition, the GTCR TMT team recently exited its investments in Six3 Systems and Landmark Aviation and sold a portion of its Merlin Media assets.
Recent Activity in TMT Core Verticals**
*Formerly known as OneSource.
**Please see the Appendix for a complete list of all of our investments in the TMT sector since 2005.***GTCR completed the sale of Six3 Systems to CACI International Inc in November 2013.
- GTCR completed the sale of Six3 Systems (“Six3") to CACI International Inc in November 2013 for $820 million
- Six3 was formed in July 2009 by industry veteran Bob Coleman. Through a series of four acquisitions, Six3 established a strong presence in the areas of intelligence surveillance and reconnaissance, intelligence operations and cyber security
- Goldman Sachs and J.P. Morgan served as financial advisors to Six3 Systems
- Merlin Media completed the sale of its sole Philadelphia radio station, WWIQ-FM (106.9 MHz), to Educational Media Foundation in November 2013
- Merlin Media sold radio station WRXP-FM (101.9 MHz, New York, NY) to CBS Corporation in December 2012
- Moelis & Company served as financial advisor to Merlin Media
- GTCR completed the sale of Landmark Aviation to the Carlyle Group in October 2012
- Morgan Stanley and Barclays served as financial advisors to Landmark Aviation
• In January 2014, Merlin Media entered into a four-year Local Marketing Agreement with Cumulus Media with respect to its two remaining Chicago stations, whereby Merlin Media will receive annual lease payments
• Zayo Group continued to acquire highly complementary fiber systems in 2012 and 2013, including:
◦ In October 2013, acquired Access Communications, a Minnesota-based provider of dark fiber services via a >1,000 route-mile network, and FiberLink, a Midwest provider of dark fiber services via two approximately 1,200 route-mile fiber networks
◦ In December 2012, acquired First Telecom, adding 8,000 route-miles in Pennsylvania and Ohio, and LiteCast, a provider of enterprise fiber solutions in Maryland
◦ Acquired US Carrier in October 2012, a fiber network operator in the southern U.S.
• In addition, Zayo Group also completed the acquisition of Core NAP, an Austin-based data center operator, in May 2013, expanding its data center offering to 21 locations
Rural Broadband Investments
• Partnered with Phil Spencer to form Rural Broadband Investments (“RBI”) in October 2012, with the purpose of acquiring broadband infrastructure assets in small and mid-sized communities
• RBI acquires and invests in incumbent cable systems serving residential and commercial customers in small, mid-market and rural geographies
• RBI completed its platform acquisition of NewWave Communications in April 2013 and has since completed three add-on acquisitions: Cable Management Associates (“CMA”) in May 2013, McDonald Cablevision (“McDonald”) in July 2013 and the Winnsboro System of CableSouth Media III (“Winnsboro”) in January 2014
• The team’s focus is on continuing to upgrade the systems and increasing high-speed residential broadband penetration, and developing the commercial services business
• Hired Joe Juliano in July 2013 as President and Chief Executive Officer. Joe brings a wealth of software industry expertise to IQNavigator (“IQN”) from his prior roles as President of Red Prairie, CEO of Prime Revenue and SVP of Worldwide Sales at Ariba
• IQN acquired the vendor management system (VMS) software and related assets of ProcureStaff Technologies from Volt Information Sciences in January 2014. The acquisition is consistent with IQN’s strategy to aggressively grow VMS revenue through new customer acquisition
Land Lease Group / TowerPoint Capital
• In May 2013, the Company formed Land Lease Group to consolidate GTCR’s two wireless site interest aggregators under one holding company and hired Bruce Albelda as President of Land Lease Group
• Land Lease Group acquired a second originator, TowerPoint Capital, led by industry veterans John Gutowski and Jesse Wellner, to increase group production and capitalize on benefits of scale in April 2013
Avention (formerly known as OneSource)
• Partnered with Joseph Ripp, Jonathan Flatow, Hank Weghorst and Bob Bies in 2011 to form Cannondale Investments to acquire an information services platform
• GTCR and Cannondale acquired OneSource Information Services, as a carve-out of InfoGroup, in October 2012
• Rebranded company as Avention in March 2014, concurrent with new product launch
• Avention provides online business information and sales intelligence solutions through an online software platform
• The Company completed its acquisition of SalesQuest, a provider of IT intelligence reports with a blue-chip customer base, in January 2014. The acquisition will further enhance the Avention product offering
• Completed the acquisition of The Trend Group in November 2012, further expanding CAMP’s Engine Condition Trend Monitoring offering
• Acquired Hariworld Travels in September 2012, a transaction that adds route diversity, expands airline relationships and gives Mondee a leading presence in the Indian market
CAMP Systems Dividend Recapitalization
- Completed a $105 million dividend recapitalization led by Deutsche Bank in December 2013
- Opportunistically re-priced both term loans, reducing interest rate on the first-lien term loan by 0.5% and interest rate on the second-lien term loan by 1.75%
Zayo Group Re-pricing
- Completed a debt re-pricing led by Morgan Stanley, Barclays and RBC in November 2013
- Re-priced term loan and revolver, reducing interest rate on the term loan by 0.5% and interest rate on the revolver by 0.25%
- Completed a $53 million term loan refinancing in June 2013
- Proceeds used to refinance existing term loan and repay $12 million of the GTCR mezzanine investment
Rural Broadband Investments Acquisition Financing
- Completed a $149 million first-lien term loan and $58 million second-lien term loan in April 2013 to finance the platform acquisition of NewWave Communications
- Completed add-on facilities to finance the acquisitions of CMA and McDonald: an incremental $55 million first-lien term loan for CMA in May 2013, and an incremental $15 million first-lien and $5 million second-lien term loan for McDonald in July 2013
- Loan package syndicated by SunTrust and Goldman Sachs
Zayo Group Amendment and Re-pricing
- Amended and re-priced both its term loan and revolving credit facility in February 2013
- The result of the re-pricing is approximately $12 million of annual cash interest savings
- Amendment upsized revolver and provided more favorable maintenance covenants
Six3 Systems Dividend Recapitalization
- Completed a $280 million dividend recapitalization in October 2012
Zayo Group Re-pricing
- Completed a re-pricing of its first-lien term loan and revolver in October 2012
- Reduced interest rates, resulting in annual cash interest savings of approximately $30 million
Avention Acquisition Financing
- Completed a $41 million first-lien term loan in October 2012 to finance the platform acquisition of Avention (formerly known as OneSource)
- Loan package syndicated by GE Capital and NXT Capital
CAMP Systems Re-pricing
- Completed a re-pricing of its first-lien term loan in September 2012
- Reduced interest rate 1.25%, which resulted in estimated cumulative pre-tax interest savings of approximately $14 million through 2016
Thesis Definition, Execution, Growth, Sale: Six3 Systems Exemplifies the GTCR Leaders Strategy™
In November 2013, GTCR completed the sale of Six3 Systems (“Six3″) to CACI International Inc (“CACI”) for $820 million, achieving an exit for its management partnership formed in 2009. Six3 exemplified GTCR Leaders Strategy™ through its partnership with CEO Bob Coleman, former President and COO of ManTech International, and CFO Jack Pearlstein, former CFO of GTCR portfolio companies Solera Holdings, DigitalNet Holdings and AppNet.
Execution of Targeted Thesis Helped Drive Organic Growth
GTCR’s partnership with Six3 aimed to build a high-end national security and defense intelligence provider focused on acquiring specialized capabilities that catered to the intelligence community, Department of Defense and civilian security agencies. In developing the investment thesis, GTCR was able to leverage its domain expertise in government IT established over the past 15 years, including through its previous investment in DigitalNet.
Through a series of four acquisitions, Six3 built a strategically significant asset in the areas of intelligence surveillance and reconnaissance, intelligence operations and cyber security. During GTCR’s ownership, revenue and EBITDA experienced organic compounded annual growth of 22% and 23%, respectively, pro forma for the impact of acquisitions.
Specialized Providers Combined Into Differentiated and Strategically Valuable Provider
GTCR and the management team established a platform to target the unmet need for highly technical processing and analytical solutions for the intelligence community. Six3’s first acquisition was Harding Security Associates in a transaction sourced through Mr. Coleman’s existing relationship with Harding’s primary shareholder, Major General Robert Harding. Six3 then acquired BIT Systems, supplementing Harding’s intelligence operations capabilities with advanced signals intelligence solutions.
The combination of these two businesses established Six3’s core capability set, which was then augmented with the tuck-in acquisitions of Novii Design, a big data analytics and cyber security company, and Ticom Geomatics, a specialized provider of geolocation and signals intelligence solutions. Six3 was able to integrate these businesses and cross-sell their differentiated capabilities into the broader Six3 customer base. In addition, the combination of capabilities facilitated the pursuit of new and larger contract opportunities than those the businesses were able to compete for independently.
CACI’s acquisition of Six3 was the largest of the company’s 55 past acquisitions and illustrated the strategic value and highly specialized capabilities built by Mr. Coleman and his team. We believe CACI will be an excellent partner to Six3, where the employees and technology can continue to grow and serve the vital mission of national security. We look forward to CACI’s and Six3’s continued success.
Larry Fey was promoted to Principal in September 2012. Larry joined GTCR in 2005 and is currently a Director of Zayo Group, CAMP Systems, Global Traffic Network and Mondee. Larry was heavily involved in past GTCR investments Six3 Systems, Landmark Aviation, Cellnet and Solera.
King Leung joined GTCR as an Associate in July 2013. Previously, he worked as an Investment Banking Analyst at J.P. Morgan. King graduated from the University of Chicago in 2011 with a Bachelor of Arts in economics.
Rich Roggeveen joined GTCR as an Associate in July 2013. Prior to that, he worked as an Investment Banking Analyst in mergers & acquisitions at Lazard, Fréres & Co. Rich graduated from the University of Notre Dame in 2011 with a Bachelor of Business Administration in finance.
Global Traffic Network
Land Lease Group
Rural Broadband Investments
This newsletter is not an offer to sell or a solicitation of an offer to buy an interest in any private fund sponsored by GTCR LLC (“GTCR”) or any of its affiliates, and was not prepared for existing or potential investors in such funds. This newsletter may not be relied upon in any manner as legal, tax or investment advice, and is not to be used for any investment purpose whatsoever. GTCR assumes no responsibility or liability for, and expressly disclaims any obligation or undertaking to update, the information contained in this newsletter.