Chicago Growth Partners Backs International Payments Business

The firm has bought a controlling interest in 2Checkout, an e-commerce company in Columbus, Ohio, Mathews said. “E-commerce payments has been a deep focus of ours for a long time,” he said. Trident Capital, a Palo Alto, Calif., buyout shop that also has expertise in payments, is a co-investor in the deal.

The transaction closed at the end of December and was sourced directly from company founder Alan Homewood, who is staying on as chairman, Mathews said. CEO Tom Dailey, a former executive at Discover Financial Services Inc. whom Homewood recruited to run 2Checkout’s day to day operations, also is continuing in his role there.

2Checkout provides payment processing and risk management services for small online merchants in international markets, Mathews said. A typical merchant handles $50,000 per year in e-commerce transactions, split fairly evenly between those that sell physical products and those that offer software or online services. Seventy-five percent of the company’s 10,000 active merchants are located outside United States, with a focus on Asia, Latin America, and almost all transact internationally, collectively channeling 100,000 unique visitors a month through the 2Checkout Web site.

In addition to customary data security and fraud protection, this kind of business demands that the processor have expanded language capabilities to serve diverse markets and the ability to handle local payment types that go beyond the globally recognized card brands, Mathews said. “The upside over the next five to seven years is tremendous for this business,” he said. “Our job is to help them scale that growth globally with our toolkit.”

Chicago Growth Partners is an operationally focused buyout firm that targets lower-mid-market companies with $5 million to $15 million EBITDA, concentrating on the sectors tech-enabled services, health care, education and industrial technology. The firm was founded in 2004 as a spinout from William Blair Capital Partners, where members of the team had worked since 1987. Chicago Growth Partners’s Web site lists 20 investing professionals and operations executives.

Known backers include the Minnesota State Board of Investment, the Minnesota State Retirement System, Kenyon College, the Goldman Sachs Group Inc. and fund-of-funds manager Conversus Capital LP, according to the Thomson One private equity database.

The firm is investing out of Chicago Growth Partners II LP, a $500 million fund that closed in 2008, Mathews said. The firm raised $270 million for its inaugural fund in 2004 after raising seven funds under the Blair banner.

With the addition of 2Checkout, Fund II has 13 portfolio companies. Mathews declined to discuss future fundraising. “We have a couple more investments to make in Fund II after 2Checkout, one or two more.” Buyouts reported last April that the firm had tapped MVision Private Equity Advisers, a placement agent with offices in London, New York and Hong Kong, to help it raise Fund III.

The firm foresees good opportunities as more entrepreneurs around the world seek new business through the Internet, Mathews said. “It’s rare to find a $1 trillion global market that is growing in double digits. The global e-commerce market may be one of the best you can play in.”