Target: iQor Holdings Inc.
Sponsor: Huntsman Gay Global Capital
Seller: Guggenheim Investment Management
Terms of the deal were not disclosed, though Gary Crittenden, a managing director at Huntsman Gay, said it is the largest investment yet for the Palo Alto, Calif.-based firm, which typically invests up to $125 million of equity in its companies. In 2009, iQor generated more than $345 million in revenues.
iQor helps mobile telephone companies, cable television providers, financial services companies and government organizations collect late payments from customers over the phone via call centers. The company, which has 11,000 employees across 21 locations in North America, Europe, India and Asia, is the second largest accounts receivable management company in the world, according to a Huntsman Gay press release.
The investment comes out of Huntsman Gay’s first fund, which closed in 2009 with $1.1 billion in commitments.
Huntsman Gay was drawn to the company because of the quality of its management and its standardized approach to collecting accounts receivable, Crittenden said. The company’s CEO, Vikas Kapoor, for example, started his career at McKinsey & Co. and founded his own consulting firm, Mitchell Madison Group LLC.
iQor has created algorithms that help its call center reps know how much they should ask for when trying to collect late payments, which has helped improve the company’s yield, or how much it’s able to collect from people late on payments, Crittendon said. Huntsman Gay was also attracted to the way the company recruits, trains and rewards its employees, according to the press release.
“iQor has spent a fair amount of time trying to systemize the process to collect receivables, to insure quality and compliance, and provide tools to individuals collecting” over the phone, Crittenden said.
Going forward, Huntsman Gay would like to expand the company further internationally with more customers and call centers. It would also like to expand iQor’s business into commercial collection services, meaning it would help collect late payments, say, from advertisers as opposed to individual consumers; and into consumer services, for example, handling service upgrades for cable company customers.