New York-based Chase Capital Partners this month formed a strategic partnership with Toronto-based Harrowston Inc., a publicly traded private equity group, to invest in Canadian companies, said Mathew Lori, a principal at Chase Capital Partners.
Chase Capital and Harrowston each will commit $100 million to the joint venture that will pursue all levels of private equity investments, including buyouts, recapitalizations, venture capital and growth equity investments, Lori said.
“We’re finding, as we are growing, that we’re trying to be proactive [in finding investments], and we’re seeing Canada as an under-served market,” Lori said. “There’s a lot of Canadian companies coming to the U.S. looking for private capital.”
The joint venture will focus on investing between $10 million and $50 million in equity in each deal, although investments could range from a few million dollars to as much as $150 million, Lori said.
The venture mirrors other regional ventures that Chase Capital has set up in India, Italy, Spain and Ireland, in which the firm teams with a local partner that has established contacts and brings its financial expertise and more than $8 billion in capital under management to the table.
Separately, Chase Capital and ABS Capital Partners were the sole investors in a $35 million financing of NetBase Computing Inc., an eight-year old consulting company. Jonathan Lynch, a Chase Capital principal, said proceeds from the funding will be used to implement a NetBase’s Web-based, middle market-focused growth strategy.
NetBase Chief Executive Ujj Nath said the company intends to gain approximately 80% of its revenue from middle market organizations that need to link old legacy systems to the Internet, while garnering 20% of revenue from larger customers such as American Honda, Intel and Dell.
“This company clicked with our vision of what is valuable in the IT segment,” Lynch said.
Nath said the company identified the opportunity to use the Internet to ease business processes in 1997 when the other companies began integrating front-end marketing operations. In 1998, the company established itself as an e-business integration operator, a move that included cutting out its sales force and replacing those people with consultants that were operating as business development employees.
“In part, customer reaction caused us to do the deal,” Lynch said. “[Customers] love these guys because they create a solution that has an immediate and tangible payback.”
NetBase intends to use proceeds from the financing primarily to expand the company’s geographic reach through acquisitions of other systems integrators.
“We want to find integrators that have a similar profile to ours, but are behind us,” Nath said. “We are limiting these acquisitions to [companies] within a two-hour flying radius on the West coast to establish our model before further expansion.”
Wind River Capital of Salt Lake City placed the offering on behalf of NetBase, Nath said.