GTCR buys VC-backed Lytx for $500 mln, eyes rapid growth

GTCR’s Phil Canfield said the Chicago firm expects rapid growth to continue at Lytx Inc after announcing its platform acquisition of the trucking technology company for at least $500 million in cash.

The company, which makes sensor arrays and built-in cameras to help improve performance and safety of truck fleets, has around 300,000 units installed after growing its subscription base by about 80 percent in 2015. While that’s a large number, the potential universe of customers ranges up to the millions for all the fleet trucks on the road, Canfield said.

“It’s really easy to see they could increase their fleet by three times and get to a million,” Canfield, managing director at GTCR, said in a phone interview. “We think there’s a ton of white space.”

Lytx describes its business as a video telematics and safety services aimed at commercial and public sector transportation.

GTCR was approached by investment banker David Baron of Rothschild about the deal and participated in an auction process. Canfield said GTCR paid more than half of the purchase price for Lytx in the form of equity, while drawing financing for the deal from three direct investors.

The deal is expected to close in the first quarter.

Lytx had been a venture-backed company but it evolved into a cash-flow business suitable for private equity ownership, Canfield said.

Lytx CEO Brandon Nixon wanted to streamline the company’s ownership structure after it attracted investments from various backers over the years, Canfield said.

The company drew $69 million in funding from eight investors in six rounds, according to Crunchbase. Backers of the company include Insight Venture Partners, JMI Equity, Menlo Ventures, Tech Coast Angels, Triangle Peak Partners and Volvo Group Venture Capital, according to CrunchBase.

Welsh Carson Anderson & Stowe kicked in $85 million in 2011, according to a press release at the time. The investment helped Lytx acquire RAIR Technologies, which provides a platform for compliance programs for regulated fleets.

Canfield said the Lytx acquisition marks one of his first since he shifted his focus at GTCR back to deals after working in more of an administrative role for a few years.

Douglas Carlisle, managing director of Menlo Ventures, said in a blog post that Lytx faced obstacles during its development, and credited CEO Nixon with improving the focus of the business.

Action Item: For more on Lytx, see: http://www.lytx.com/

Photo of Philip Canfield courtesy of GTCR

This story was edited for style and clarity after publication