Trive Capital is on the lookout for more carveouts after its $330 million cash acquisition of internet-service provider EarthLink on Dec. 31.
The Dallas PE shop acquired Atlanta-based EarthLink from Windstream Holdings, financing the deal with its cash assets.
As part of the deal, Trive will also receive assets of nQue Technologies, as well as EarthLink’s midtown Atlanta office building, which once again will serve as headquarters.
The investment came out of Trive Capital Fund III, which closed on more than $1 billion in 2017, Conner Searcy, co-founder and managing partner, told Buyouts. The fund is around 20 percent deployed, Searcy said.
EarthLink provides internet access, premium email, web hosting and privacy and data security products to customers based in the U.S.
Although the EarthLink brand is often associated with the 1990s, when the company pioneered a dial-up internet service, Trive Capital sees room to grow the company.
Trive plans to grow EarthLink’s business 3x to 5x organically by improving operational efficiency, expanding its national footprint and adding more jobs at its Atlanta office, Searcy said.
The auction process was not competitive due to the complexity of the corporate carveout, Searcy said, adding that Windstream initially hired Goldman Sachs to assist in the sale.
“The number of PE firms that are willing to tackle a complex corporate carveout and insert operational resources is limited,” Searcy said. “And we have internal resources for this.”
Meanwhile, Trive continues to look for carveouts outside the EarthLink platform. The firm is looking to acquire businesses that are often overlooked but could grow with help of Trive’s internal resources.
Trive Capital, founded in 1998 by Searcy and Chris Zugaro, invests equity and debt in middle-market companies that have potential to improve operationally. The firm manages more than $2 billion.
EarthLink was the firm’s second tech investment in 2018, following its August acquisition of Picture Head, a facility-based, tech-enabled provider of post-production services for feature-film, episodic-TV and other media studios.
Along with technology, media, and telecom, Trive invests in aerospace, consumer services, healthcare, energy, automotive and transport.
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