TSG Capital Invests in Hispanic Phone Co.

TSG Capital Group this month invested $20 million in Pointe Communications Corp. in the form of convertible preferred stock.

The company, which is traded over the counter, is a communications provider that focuses on businesses and residential customers in Hispanic population centers in the U.S. and Central and South America. Conversion price for the stock is based on certain performance criteria and carries a 12% coupon with a 12-year security, said TSG Capital Partner Darryl Thompson.

TSG Capital’s investment is part of PointeCom’s $21 million second round of private placement funding. Fremont, Calif.-based Opportunity Capital Partners rounded out the financing with a $1 million equity contribution for this round. In May, PointeCom completed the sale of $30.2 million of convertible preferred stock to Sandler Capital Management, Oger Pensat Holdings and CPP LLC.

Stamford, Conn.-based TSG Capital invests in companies serving fast-growing, under-served ethnic markets. Thompson said his firm likes the ethnic aspect of PointeCom, and Hispanic markets in the Americas are among the fastest growing markets in the world.

“Hispanic phone usage is 50% higher than average phone usage,” he said. Thompson attributes this to strong family attachments, especially between paired international market groups such as those in Puerto Rico and New York.

In a Sept. 14 statement issued by PointeCom, Chairman and Chief Executive Officer Stephen Raville said the funding will allow the company to expand the development of its domestic and international competitive local exchange carrier (CLEC) networks. The company anticipates offering its full service bundle to Miami and Los Angeles in the first quarter of next year, expanding to eight of the top 10 U.S. Hispanic markets over the next 24 months, the statement said.

PointeCom provides telecommunications and network services, including competitive local exchange carrier operations, long distance, data, Internet, prepaid calling cards, carrier wholesale, international private line and telecommuting services to its customers. PointeCom has offices and facilities in Houston, Atlanta, Los Angeles and Miami, and throughout Latin America.

TSG Capital, with approximately $740 million under management, has investments in media, communications, specialty retailing, automotive and consumer goods and services industries. The firm currently is investing TSG Capital Fund III LP, which closed on $515 million in January.