American Capital Strategies Ltd. announced today investments totaling $93 million made in the fourth quarter of 2005 in two portfolio companies.
One of the investments involved an American Capital-sponsored buyout of SAV Holdings Inc. (“SAV”), the nation’s second largest outsourced provider of audio visual equipment and related technical support services to hotels and resorts. The other investment was in H-Cube Inc., a portfolio company of GTCR Golder Rauner LLC. H-Cube is the parent company to Zenta Global Ltd., an existing American Capital portfolio company and a U.S.-based leader in high quality business process outsourcing (“BPO”) services. The investment supports H-Cube’s acquisition of Global Realty Outsourcing Inc. (“GRO”), a leading outsourcing partner to the commercial and residential real estate and financial services markets. American Capital’s investments in SAV Holdings and H-Cube include senior debt, senior subordinated debt and redeemable preferred and common equity. In addition to American Capital’s investment in SAV, LaSalle Bank is providing a revolving credit facility and, along with Wachovia Bank, is investing in a senior term loan. SAV’s management is also investing in the equity.
“Our investment in SAV illustrates our buyout expertise and ability to work with management teams to create value,” said American Capital Chief Operating Officer Ira Wagner. “Our add-on investment supporting the combination of Zenta and GRO demonstrates our continued support of our portfolio companies and ability to work efficiently with outstanding private equity firms like GTCR, with whom we’ve built a strong and long-lasting relationship through seven investments.”
American Capital has invested approximately $3.2 billion in 2005, approximately $1 billion in the fourth quarter 2005 and $38 million year to date. These amounts do not include American Capital’s unfunded equity commitment and debt funded to its portfolio company European Capital. For more information about American Capital’s portfolio, go to http://www.americancapital.com/our_portfolio/our_portfolio.cfm.
“SAV began the concept of providing in-house audio visual equipment and services to hotel clients. With its cutting edge technology and skilled technicians that undergo a robust training program, SAV has developed a national reputation for consistent quality service,” said American Capital Principal Jonathan Leiman. “SAV’s success is evident by its high customer retention rates and attractive long-term contracts with many of the finest hotels in the U.S. SAV’s leading market position, growing market share, attractive growth opportunities and scalable platform bode well for its continued success. In addition, we are confident in SAV’s experienced and passionate management team that has performed well over the years and positioned SAV for future growth in the hospitality market.”
“GRO pioneered the concept of offshoring sophisticated real estate services. The Company remains the leading real estate outsourcing partner for U.S. financial institutions, with a strong brand name and robust revenue growth opportunities,” said American Capital Principal Demian Kircher. “GRO’s capabilities, breadth of service offerings and niche market position make it an attractive add-on investment to H-Cube. GRO’s real estate platform extends H-Cube’s expertise and product offering within the financial services industry, giving the combined entity significant BPO scale with a compelling value proposition and an impressive customer base. In addition, with complementary capabilities, including voice and data, that together offer an end-to-end product suite, the combination is expected to result in significant cost and revenue synergies. As the BPO industry is expected to experience substantial growth, the new, larger entity will be in an excellent position to build a strong global brand and meet worldwide customer demands. We’re confident in the industry leading management teams from GRO and Zenta, in addition to the leadership of GTCR and H-Cube, and believe together they will focus efforts on expanding BPO operations in various geographies around the globe.”
American Capital first invested in Zenta in May 2005, supporting the acquisition of Zenta by H-Cube. H-Cube was formed in 2005 by GTCR and Henry Hortenstine, a former Executive Vice President of Affiliated Computer Services Inc., a Fortune 500 global business process outsourcing company. American Capital’s investment took the form of a senior term loan and a modest equity co-investment alongside GTCR and Zenta senior management. American Capital also committed additional debt financing to support the Company’s anticipated growth and for other corporate purposes.
Zenta, founded in 2001 and headquartered in Wayne, Pennsylvania, with principal operating offices in India, provides business process outsourcing services. The Company is the sixth largest Indian BPO and one of the largest non-captive Indian BPO service providers in its market. Zenta currently has over 2,600 full time employees in its operational facilities in Mumbai, India. Zenta’s business offering includes credit card servicing, mortgage servicing, accounts receivable management and insurance claims management. Zenta is ISO- 9001 certified and was recently rated among the top 10 of India’s BPO companies by NASSCOM, the leading organization for public policy for the Indian software industry.