Online Services

KKR Acquires Fotolia

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Kohlberg Kravis Roberts & Co. today announced the completion of the acquisition of Fotolia, a provider of digital images and videos. “This investment is about providing entrepreneurial capital and further accelerating Fotolia’s phenomenal growth. We are excited to partner with the team that has built Fotolia from a startup into one of the world’s leading microstock platforms,” said Philipp Freise, Head of European Media Investments for KKR.

In May, KKR announced a $150 million growth equity investment in Fotolia. In addition, KKR, TA Associates and management worked with KKR Capital Markets and a number of relationship banks to put in place $150 million of senior financing for the company.

Fotolia is a provider of digital images and videos and operates websites in 15 countries in 11 languages (English, French, German, Spanish, Italian, Portuguese, Polish, Russian, Japanese, Turkish, and Korean). The company’s portfolio consists of over 17 million digital images and videos. The company was founded in 2005 and is based in New York, NY (www.fotolia.com).

“Our goal is to be the global source of inspiration for designers and buyers of creative content. We are extremely proud to have KKR join Fotolia as a lead investor. The extensive worldwide network of KKR will enable us to cement our global leadership in the stock photography industry,” said Oleg Tscheltzoff, co-Founder and CEO of Fotolia.

KKR makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East. The firm has $62 billion in assets under management. In addition to its New York headquarters the firm has offices in Menlo Park, San Francisco, Houston, Washington DC, London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney (www.kkr.com).

GlendonTodd Capital Acquires Aztec Systems

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GlendonTodd Capital announced today that it has acquired Aztec Systems, a provider of IT outsourcing and business services to middle-market companies.

“Aztec fits perfectly with our philosophy of seeking investment opportunities in the technology space that fit with our deep operational experience. Aztec’s leadership of Andrew Levi and Chris Burleson has developed a solid operational foundation and strategic vision that will remain core drivers of Aztec’s continued growth. With the Company’s unique ability to serve middle-market companies in a rapidly growing technology sector, we plan to execute on our collective vision to drive long term growth and shareholder value creation,” said Todd Furniss, Managing Partner of GlendonTodd.

Aztec Systems is an IT outsourcing and business services provider to middle-market companies located across the south-central region of the United States. The company maintains a home office in Carrollton, TX with branch offices in Austin, Tulsa, Oklahoma City, and San José, Costa Rica (www.Aztecsystems.com).

GlendonTodd Capital is a private equity firm focused on companies in the technology enabled business services sector and healthcare sector. The firm is based in Dallas, TX (www.glendontodd.com).

LLR Partners Invests in Message Systems

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LLR Partners today announced a growth capital investment in Message Systems, a digital messaging company. Message Systems will use the investment from LLR Partners to strengthen and further develop its customer engagement software, strengthen its position in current vertical markets and expand into new industry sectors. The transaction also provides liquidity to NewSpring Capital, which invested in Message Systems in 2010, as well as other shareholders.

Message Systems offers a family of software solutions and services that addresses the digital communications needs of companies. Customers include telecommunications carriers, internet service providers, marketing services providers, cloud computing firms and social media companies. Founded in 1997, the company is headquartered in Columbia, MD (www.messagesystems.com).

Message Systems is LLR Partners’ second transaction in the Baltimore-Washington D.C. corridor since announcing its commitment to investing in the region in spring 2011.

“Social media, mobile technologies and emerging digital messaging channels have completely changed the way consumers communicate with each other and with businesses on a daily basis. Message Systems enables enterprises to engage customers through emerging digital channels, and achieve new levels of personalization and targeted interaction,” said Greg Case, partner leading the Software & IT Services investment team at LLR. “It is another example of the Baltimore-D.C. market nurturing strong, under-the-radar, middle market companies that are leading the way in how enterprises leverage new technology.”

“By partnering with LLR, Message Systems will be able to accelerate growth and differentiate ourselves with an expanding suite of solutions,” says George Schlossnagle, founder and CEO of Message Systems. “Our unique technologies help companies with complex challenges in sending and receiving digital messages better leverage data to manage real-time messaging policy. They are proven to drive higher engagement rates, support new monetization strategies and optimize deliverability. The gains our clients in social media and daily deals have realized from mobile and cross-channel messaging are proving just as relevant to enterprises in financial services, retail, consumer technology, travel and more. We look forward to working with LLR.”

Mr. Case and Paul Winn, operating partner at LLR Partners, will join the board of directors at Message Systems.

LLR Partners makes both minority and control investments in middle market growth companies. Industries of interest include healthcare; financial and business services; information technology; and education. LLR is currently investing out of its $800 million third fund, LLR III. The firm has over $1.4 billion of assets under management and is located in Philadelphia, PA (www.llrpartners.com).

TPG Growth Acquires iMDsoft

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iMDsoft, a provider of high acuity clinical information systems, today announced that it has been acquired by TPG Growth, the middle market and growth equity investment platform of TPG.

iMDsoft’s flagship product, the MetaVision Suite, is a solution designed to automate hospitals’ high-acuity clinical workflow. Over 230 hospitals in 25 countries have chosen the MetaVision Suite, including 4 of the top 10 hospitals in the US and 13 of the top 50 hospitals in Europe. Using MetaVision, customers have significantly improved care quality and patient safety, enhanced financial performance and increased compliance with complex clinical and administrative protocols. iMDsoft was founded in 1996 by Phyllis Gotlib and Dr. Ido Schoenberg and is based in Needham, MA (www.imd-soft.com).

“We are excited to be joining forces with iMDsoft,” said Matthew Hobart, Managing Director of TPG Growth. “The market for software systems designed to manage and coordinate care for acutely ill patients is growing rapidly. iMDsoft has succeeded in developing, marketing and deploying innovative technologies to some of the most demanding healthcare customers in the world. Recent implementations across state-wide health networks in North America, Australia and Europe demonstrate the pervasive need for the company’s products.”

“TPG’s investment in our company is an important stamp of approval of what the iMDsoft family has accomplished and we are thrilled to partner with them. We believe that TPG Growth’s assets, access to top tier talent and management expertise will enable us to execute on our ambitious growth strategy, continue our trajectory of technological innovation and support our growing worldwide customer base,” said Phyllis Gotlib, CEO of iMDsoft. “Exploding healthcare costs have become a global crisis, and our MetaVision Suite, as well as our series of new products currently under development, can help health systems, hospital networks and governments reduce their cost of care while simultaneously improving clinical outcomes. Together with TPG Growth, we are well positioned to continue our mission on a larger scale.”

TPG Growth is the middle market and growth equity investment platform of TPG, the global private investment firm. With $3 billion under management, TPG Growth targets investments in a range of industries and geographies, utilizing leveraged buyout, growth equity, and private investment in public equity structures. The firm has offices in San Francisco, Ft. Worth, New York, Hong Kong, Beijing, Singapore and Mumbai (www.tpggrowth.com).

GCP Capital Partners Invests in XL Marketing

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XL Marketing, a digital and direct marketing company, today announced an investment by private equity firm GCP Capital Partners as well as a debt facility agented by Madison Capital Funding. The $70 million capital raise will be used by XL Marketing to fund continued growth through organic business activities, as well as strategic acquisitions.

“The shift to digital and XL’s unique client offerings makes this the ideal time for innovative companies to create value. We believe XL Marketing is uniquely positioned to help its clients capture the full potential of their online marketing efforts,” said Robert Niehaus, Chairman and Founder of GCP Capital Partners, who will also be joining the company’s board of directors.

XL Marketing is a digital and direct marketing company that uses its consumer marketing platform to generate high quality customers for leading brands. The platform encompasses all interactive channels including email, search, social media and call center. The company focuses on several sectors including financial services, education, insurance and health & wellness. XL Marketing has more than 200 employees and is headquartered in New York with offices in Washington DC, Tampa, San Francisco and London and Bristol in the UK (www.xlmarketing.com).

“We are thrilled to bring on such stellar partners to help us take the company to the next level,” said David Steinberg, XL Marketing CEO. “As we continue to execute on our growth plans in the US, UK and other international markets, it was essential to secure the right kind of capital, with the right partners. We now have the balance sheet, strategic partners and assets and capabilities to compete and win in every market where we play.”

GCP Capital Partners manages three private equity funds that have invested $1.2 billion in 49 portfolio companies. GCP has monetized 35 of these investments, returning $2.2 billion in proceeds. The funds have made significant investments in the business services, education, energy, financial services, insurance and telecommunications industries. GCP generally makes controlling or influential minority investments of $10 million to $50 million in companies with enterprise values of $20 million to $250 million. GCP Capital Partners was formed as the successor to Greenhill Capital Partners, the merchant banking business of Greenhill & Co., Inc. (NYSE: GHL), which was founded in 2000. With the support of Greenhill & Co., the founders and senior investment professionals of Greenhill Capital Partners founded GCP Capital in December 2009 to manage the existing Greenhill Capital Partners funds and to raise successor funds. The firm is headquartered in New York, NY (www.greenhillcapitalpartners.com).

Investor Group and Bell to Acquire Q9 Networks

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An investor group, comprising Ontario Teachers’ Pension Plan, Providence Equity Partners and Madison Dearborn Partners, and BCE Inc. today announced an agreement to acquire 100% of Canadian data centre operator Q9 Networks for C$1.1 billion. “Q9 looks forward to working with these leading private-equity firms and Canada’s largest communications company, all of which have a strong track record of growing leading-edge companies like Q9,” said Osama Arafat, CEO of Q9 Networks. “They recognize the value of Q9 and its team, an exceptional Canadian company dedicated to providing organizations with highly secure and reliable data centre infrastructure services.”

Under the agreement, Teachers, Providence and Madison Dearborn will contribute 70%, or C$420 million of the equity funding and Bell will provide the remaining 30%, or C$180 million. New debt financing by Q9, already committed, will also fund a portion of the acquisition. The transaction is expected to close before the end of 2012.

With 11 data centers in Alberta, British Columbia and Ontario, Q9 is Canada’s leading provider of outsourced data center solutions for organizations with mission-critical IT operations. Q9 will continue to be headquartered in Toronto and operate as a stand-alone entity. Existing Q9 management will continue operating the company, including Chief Executive Officer Osama Arafat and President & Chief Operating Officer Paul Sharpe (www.q9.com).

“Q9 is a recognized leader in data centre services for business customers large and small, an ideal partner to grow our hosting and cloud-based business while leveraging our world-leading broadband network infrastructure,” said Tom Little, President of Bell Business Markets. “Bell looks forward to working with our partners and to offering our national business customer base access to Q9’s hosting and co-location services while delivering Bell’s broadband network solutions to Q9’s extensive client roster.”

Bank of Montreal, Royal Bank of Canada and Toronto Dominion are providing debt financing for the transaction. BMO Capital Markets and TD Securities served as financial advisors to Q9. Barclays, Evercore Partners, and RBC Capital Markets are serving as financial advisors to the investor group.

With $117 billion in assets as of December 31, 2011, the Ontario Teachers’ Pension Plan is the largest single-profession pension plan in Canada. An independent organization, it invests the pension fund’s assets and administers the pensions of 300,000 active and retired teachers in Ontario and is based in Toronto (www.otpp.com).

Providence Equity Partners invests in the media, entertainment, communications and information industries and has approximately $23 billion of equity capital under management. The firm was founded in 1989 and is based in Providence, RI with additional offices in New York, NY; Los Angeles, CA; London, UK; Hong Kong; and New Delhi (www.provequity.com).

Madison Dearborn Partners has more than $18 billion of capital under management and makes investments through its most recent funds, Madison Dearborn Capital Partners V and Madison Dearborn Capital Partners VI. Madison Dearborn invests in businesses across a spectrum of industries including basic industries; business and government services; consumer; financial services; health care; and telecom, media and technology services. The firm was founded in 1992 and is based in Chicago, IL (www.mdcp.com).

BCE is Canada’s largest communications company providing broadband wireless and wireline communication services to residential and business customers across Canada. The company operates Bell Media, a multimedia company with assets in television, radio and digital media, including CTV, Canada’s #1 television network, and the country’s most-watched specialty channels. The company is based in Montreal (www.bce.ca) (www.bellmedia.ca).