Archives for August 21, 2012

Royalties not Warrants: Sandy Robertson Invests in Urban Capital

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Urban Capital of America today announced that Sanford Robertson, Co-Founder of Francisco Partners, is investing in Urban Capital Royalty Fund I, a new mezzanine fund that uses royalties instead of warrants.

In its simplest form, a royalty is paid to the investor on the business’s revenue growth over an agreed upon and limited time frame. The funding is typically structured as a loan to the company and principal, interest and the royalty are returned over a term that meets the business’s cash flow requirements; with no valuation debate or exit necessary. After the loan term ends, the investor has realized a fair return on their capital, the company has grown in size and the business owner still owns and controls the company. According to Urban Capital, this “pay as you grow” approach creates a correct alignment of interests between owner and investor.

Mr. Robertson pioneered the creation of West Coast technology banking as an industry in the late 1960s and has remained one of the industry’s most renowned participants. He served as vice president and director at Smith Barney before founding a firm that later became Montgomery Securities. In 1978, he founded Robertson, Stephens & Co, one of the most significant underwriters of IPOs, mergers, and acquisitions. After selling the company in 1998, he founded Francisco Partners, a technology-focused private equity fund.

“I am so pleased to have Sandy invest in our U.C. Royalty Fund I,” said Urban Capital Chairman and CEO, Barry Wilson. “Sandy Robertson is a legend in our industry and I am proud to have him as an investor in this very important fund.”

Mr. Robertson has had significant financing involvement in over 500 growth technology companies, including 3Com, America Online, Applied Materials, Ascend, Dell Computer, E*Trade, Siebel, and Sun. He serves on the boards of Dolby Laboratories, Pain Therapeutics, Salesforce.com and the Schwab Fund for Charitable Giving, as well as on the President’s Board at the University of Michigan.

Urban Capital of America provides growth capital to small and medium-sized businesses. Urban uses Royalty-Based Financing instead of warrants or equity. The firm is led by Barry Wilson and is based in Laguna Niguel, CA (www.urbancapital.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 8-21-12

Lightyear Capital Acquires Healthcare Benefit Solutions Business

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Lightyear Capital has completed the acquisition of the Healthcare Benefit Solutions Business of Fidelity National Information Services for $335 million. The acquired business has been renamed and will operate as Alegeus Technologies.

Alegeus Technologies is a financial technology company providing benefits administration software as a service, multi-purse debit cards and transaction processing solutions for consumer directed healthcare (“CDH”) accounts. The company has the number one market share in both healthcare benefit administration and debit card processing technology and is the only integrated technology provider in the CDH sector. Robert Natt will be Alegeus’ full time Executive Chairman and Thomas Torre will be its Chief Executive Officer. Alegeus Technologies is headquartered in Waltham, MA, with operations in Carrollton, TX and Milwaukee, WI. (www.alegeustechnologies.com).

“We are extremely excited to add Alegeus to our portfolio of high-quality, market-leading companies in the financial services space,” said Donald Marron, Chairman of Lightyear. “There is tremendous opportunity to grow and expand this business, and we look forward to working closely with Bob Natt, Tom Torre and the rest of the Alegeus team to invest in the talent and technology which will extend its leadership in consumer directed healthcare.”

Lightyear Capital makes control investments in North America-based, middle-market financial services companies. Lightyear has managed approximately $3 billion of committed capital with investments across the financial services sector, including asset management, banking, brokerage, financial technology, insurance, and specialty finance. The firm is located in New York, NY (www.lycap.com).

TripleTree acted as the exclusive strategic advisor to Fidelity National Information Services (FIS) in connection with the transaction. TripleTree is an independent, research-driven investment bank focused on mergers and acquisitions, financial restructuring, and principal investing services. The firm is based in Minneapolis, MN (www.triple-tree.com).

“FIS has built a market leading position in healthcare account processing and payment services, and this business continues to perform very well,” said Gary Norcross, President and Chief Operating Officer of FIS. “TripleTree was retained to help us understand the considerations associated with the healthcare business. We ultimately made a decision to divest of the business. TripleTree provided us with good alternatives as our advisor and was a solid partner throughout the engagement until closing.”

“We found a great home and investor for this business, enabling the company to maintain its leadership position and continue growing to meet the evolving needs of the industry,” said Scott Tudor, Managing Director at TripleTree. “We are very pleased that we were able to position the new company for future success while enabling a continued focus on serving financial institutions for FIS.”

© 2012 PEPD • Private Equity’s Leading News Magazine • 8-21-12

Excellere Partners Acquires Integrated Petroleum Technologies

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Excellere Partner has made an investment in Integrated Petroleum Technologies (“IPT”), a provider of oil and natural gas engineering consulting services. “We elected to partner with Excellere given its proprietary value creation tools and processes that we will leverage to help accelerate our growth and solidify our position as the premier provider of outsourced oil and natural gas engineering consulting services,” said Billy Aud, chief executive officer and co-founder of Integrated Petroleum Technologies.

“We are excited to partner with an industry leader that maintains deep technical expertise and a stable of experienced engineers supporting their customers to optimize productivity,” said David Kessenich, managing partner at Excellere. “Unconventional drilling methods have become increasingly prevalent as exploration and production companies seek to unlock the value of natural resources contained in shale plays, tight formations and other difficult to reach locations. As the market continues to evolve, we believe that IPT’s comprehensive solutions, long-term operating experience and unmatched expertise in hydraulic fracturing positions the company to continue enhancing its market leadership position.”

IPT is an oil and natural gas engineering consulting services firm specializing in the integration of modern reservoir engineering, hydraulic fracture stimulation and well completion. The company was founded in 1991 and is based in Lakewood, CO (www.iptengineers.com).

“Since our founding, we have strived to develop industry leading technical capabilities that enable our clients to maximize the value of their underlying oil and gas reserves. Excellere’s successful track record and experience supporting entrepreneurs with aggressive growth strategies focusing on the customer will prove invaluable as we seek to further enhance our service offerings, expand our capabilities and enter new markets,” said Mr. Aud.

Excellere Partners invests in middle-market companies with revenues ranging from $20 million to $150 million. Sectors of interest include healthcare; specialty foods; industrial technology and services; business services; and education and training. The firm has $737 million of capital under management and is based in Denver, CO (www.excellerepartners.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 8-21-12

Goldman Sachs Capital Partners Acquires Suncoast Insurance Associates

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USI Insurance Services, a portfolio company of Goldman Sachs Capital Partners, has acquired Suncoast Insurance Associates, a professional liability insurance brokerage.

Suncoast Insurance Associates (SIA) is an insurance brokerage operation that provides the design, delivery and servicing of professional liability insurance programs for more than 1,500 Florida-based professional firms including architects & engineers, lawyers, CPA’s, and environmental consultants. The company was founded in 1975 and is based in Tampa, FL (www.sunoastins.com).

“For almost four decades, Suncoast Insurance Associates has been the “go-to” insurance agency for the design firm marketplace in Florida. In addition to architects and engineers, Suncoast has growing practices providing professional liability for healthcare, technology, accounting and law firms. SIA’s deep strong relationships are a perfect match for USI’s strategy of providing custom insurance solutions for growing industry verticals. With this acquisition, USI has bolstered its growing national footprint in professional liability, with significant practices in the Northwest, Southwest, Midwest and now Southeast,” said James Dunn, USI’s regional CEO for Southeast.

USI is a distributor of property and casualty insurance and employee benefits products to businesses throughout the United States. USI was founded in 1994 and is headquartered in Briarcliff Manor, NY, and operates out of 81 offices in 24 states (www.usi.biz.).

GS Capital Partners is the private equity vehicle through which Goldman Sachs conducts its large, privately negotiated, corporate equity investment activities and is currently investing through its sixth fund. GS Capital Partners focuses on large, sophisticated business opportunities in which value can be created through leveraging the resources of Goldman Sachs (www.gs.com/pia).

© 2012 PEPD • Private Equity’s Leading News Magazine • 8-21-12