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Riverside Partners Exec Thinks Company Could Make Further Satellite Acquisitions

By | December 5, 2011
      [Satellite News 12-05-11] Riverside Partners, a Boston based private equity company, recently acquired a majority interest in ITC Global, an international provider of satellite communications services to mining, energy and maritime businesses. The company believes it could use this acquisition to deepen its involvement in the satellite sector. When asked if this deal could be the catalyst for other deals in the satellite sector, Steven Kaplan, General Partner, Riverside Partners told Satellite News, “We have been working with the ITC Global team for a number of months, and there are definitely other companies out there that interest us. But, yes one deal often leads to another. We are looking to grow and expand ITC.
          However, while the company could invest further in satellite companies, it is likely to move forward cautiously. Kaplan admits that while Riverside Partners likes the satellite market space, it has been scared off by high valuations of other potential acquisition targets. “We have been shown some satellite opportunities recently that we did not think were particularly attractive investments for us. It is not because the satellite space is unattractive, but maybe because the valuation expectations may have been too high. There have been a couple of deals done in this space with very high valuations. There are people out there looking to do the same thing. We won’t be the investors in those deals. We are looking to invest in management teams that are going to stay with their companies and grow those companies,” Kaplan said.
          Yet, the demand for bandwidth makes the satellite sector an attractive one for a private equity firm such as Riverside Partners. “If you step back, the bandwidth requirements in the world are increasingly growing, whether it is the need for video, whether it is the need to always to stay connected or whether it is to integrate into a company’s core operations and enterprise systems. Years ago, what people would have thought were their bandwidth requirements are now just a drop in the ocean, so we have invested into satellite and fiber optic telecom companies and you can expect us to continue to look at these two spaces,” said Kaplan. “The world is going to keep growing in terms of the amount of bandwidth it needs, and one of the things we like about ITC Global, is they offer always-on, non-contended high-quality networks, which is what people increasingly demand. I think it would be a fair statement to say we are looking for further acquisitions in the satellite sector.
          Riverside Partners is a sector focused investment firm that invests only in technology and healthcare companies. It makes around half of its investment in technologies in companies. Kaplan said it decided to invest in ITC Global because, “ITC Global has a terrific management team. While relatively small in the overall VSAT world, ITC has achieved a terrific degree of success, and has a wonderful reputation with its customers. We think there is a real opportunity to grow the company, so that is what attracted us. Frankly, we had a very strong chemistry with the management team. They have established a terrific position in the mining sector, and we think there is a lot of opportunity to continue to grow in that sector.
          For ITC Global, the deal with Riverside Partners potentially gives it more financial firepower to build the business. When asked if it needed an investor, Joseph Spytek, co-founder and CEO of ITC Global, told Satellite News that the company did not necessarily need a financial investor. “We were/are financially solid and long-term sustainable in our own right. However, our core market sector is part-way through a once-in-a-generation period of growth and the capital and resources that Riverside provide will help accelerate our existing rate of growth, and make sure that we are able to completely meet the needs of our clients.”
          Spytek, like Kaplan, said the company could look to make acquisitions. Mapping out the company’s potential strategy here, Spytek said, “We are (looking at acquisitions), but we will be very selective and the acquisition must increase our market position in one of our target sectors (mining, energy or maritime) or help us expand into a particular geography. Our clients operate on a truly global basis and in some of the world’s most demanding environments and they expect us to be there to support them.”
          According to Spytek, the company has two key growth drivers for its business. He says, “Firstly, our clients are adopting IP-centric technologies that are fundamental to their long-term sustained competitive advantage, and these solutions require well designed and well managed high availability communications solutions, the provision of which is a key part of ITC Global’s value proposition. Secondly, the workforce is increasingly being populated by young, recently trained employees, all of whom have grown up in an environment of always-on IP connectivity. These employees are willing to work in remote, isolated and challenging locations, as long as they remain virtually connected by virtue of Web 2.0 tools, including social networking tools.”
          Spytek believes the economic downturn that has impacted many markets around the world has actually been a positive thing for ITC Global in its ability to sell solutions. “Clients have spurned stodgy traditional suppliers and other inflexible modes of working, and have turned to modern IP-centric communications and work methods to ensure that they are able to remain competitive in this challenging macro-economic environment,” he said. “ITC Global has been able to offer the right solutions at the right time, as part of our lifecycle approach to client relationships, and as a result our clients have benefitted enormously and we as a company have seen increased revenue during this period.”

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