Internet Capital to Invest $450 Mln in eCredit.com (Update5)
2/24/00 1:02:00 PM
Source: Bloomberg News
(Adds analyst comments in 7th paragraph.)
Wayne, Pennsylvania, Feb. 24 (Bloomberg) -- Internet Capital Group Inc., an investor in
electronic-commerce businesses, agreed to make its largest investment, buying a stake in online
financing broker eCredit.com for $450 million in stock as it pushes into financial services.
Internet Capital bought between 33 percent and 85 percent of closely
held eCredit.com, said Ken Fox, ICG managing director and
co-founder. Based in Dedham, Massachusetts, eCredit.com uses the
Web to connect companies to lending institutions, cutting the
processing time for credit and financing applications.
''Businesses can't buy and sell goods and services without access to
credit, trade financing, leasing or borrowing,'' said Fox. ''This is going
to be a core segment for us; you're going to see us build a large
financial services group.''
Internet Capital has been assembling a network of companies that
link buyers and sellers of goods and services on the Internet, both
companies that use the Web to make business-to- business markets
and companies that provide services to support such commerce. Last
month, Internet Capital said it will at least double investments in
providers of such support services to $1.2 billion this year, from about
$600 million in 1999.
Leading its new financial services effort is Chris Klein, a former
McKinsey & Co. partner specializing in financial institutions, who was named a managing director
yesterday. Klein will oversee the investment in eCredit.com and will join that company's board along
with Fox and Anthony Ibar-Guen, managing director for professional services.
Financial Links
eCredit.com links companies to financing firms and information sources including Dun & Bradstreet,
Experian, Trans Union and Equifax. The company will offer Internet Capital's partner companies and
other their client's electronic access to financing.
''That fits in well,'' said Jon Ekoniak, electronic commerce analyst with U.S. Bancorp Piper Jaffray,
who has a 'strong buy' rating on Internet Capital stock. ''There are a couple of missing pieces of the
puzzle in closing in e-commerce, credit is one, and logistics is the other, and Internet Capital is
trying to close the loops so it can all be done together.''
For example, Internet Capital owns 42 percent of CommerX Inc., which runs the PlasticsNet.com web
site where plastics producers trade services and materials. A user of that site could use eCredit.com
to finance its purchase or resins, said Fox.
eCredit.com's founder and chairman, Venkat Srinivasan, is a former professor at Massachusetts'
Northeastern University who started the company as SSR Solutions in 1993. Dennis Phelps, an
Internet Capital acquisitions executive, was with battery ventures when it made an initial investment
in eCredit.com, said Fox.
ALSO FROM RB THREAD>>>>>>>>>>>
Taking a Look at ICG's eCredit Deal
Internet Capital's $450 investment in eCredit Thursday was almost entirely discounted by
shareholders whose focus was primarily on the Company's Q4 earnings report.
Surely the deal deserved more attention, especially if one realizes that ICG shelled out
nearly a half billion dollars in stock to complete the alliance. The Company declared that
their investment in eCredit was the largest to date.
Critics have long panned Internet Capital for investing very little capital in their partner
companies. But with ICG's earlier cash and stock investment of $180 Million in MetalSite
and Thursday's eCredit deal, such critics will have to change the tune of their argument.
With a warchest of over $1.4 Billion, Internet Capital has said it will be able to make such
large investments.
"Internet Capital Group was able to use equity to acquire significant stakes in these
entities, showing our ability to leverage our currency and participate in later stage
acquisition opportunities," said Ken Fox co-founder of ICG.
Added co-founder and CEO Walter Buckley, "With our expanded capital base Internet
Capital Group will now be able to aggressively pursue the balance of the top 50 global
markets that we have identified."
Should Internet Capital's investment in eCredit prove to be a winner, the Company's will
experience gargantuan returns. Shareholders are aware of ICG's impressive past
performance. ICG invests, say, $26 in Company A. ICG then builds then nourishes its
new partner company via their proven management team and network. Finally, ICG bring
the rejuvenated, renovated company public, where their $26 Million investment balloons
to nearly $200 Million. Imagine what will happen to ICG's investment in eCredit should
eCredit travel down the same path.
And all of that isn't wishful thinking. Taking a quick glance at the eCredit, you can just
taste Internet Capital's success to come. According to the eCredit's website, the
company is a leader in the market for real-time credit field, financing and related services
for e-business through the eCredit.com Global Financing Network.
Add to their leadership a distinguished Management team.
A partial list of eCredit's impressive list of customers include:
Aristech
Armstrong
Beckman
Bell South Yellow Pages
Bingham Financial Services
BP Amoco
Cargill
Chevron
Cisco
The CIT Group
Commerx, Inc. (PlasticsNet.Com)
Conoco
Cooper Tire
Dana
EBurial.com
EqualFooting
Fidelity
Fleet Leasing Corporation
Genetech
Gateway
Hewlett-Packard
HomePoint.com
Intel
Levi Strauss
Mercedes-Benz
Miadora
Microsoft
Procter & Gamble
RedPost.com
RR Donnelley
Samsung
TechData
Technologynet.com
Texaco
Textron
Weyerhaeuser
"Both of these markets embody enormous revenue and profit potential," stated ICG
co-founder Ken Fox in reference to the MetalSite and eCredit deals.
If indeed Internet Capital's investment in MetalSite and eCredit blossom--as I suspect it
will--so shall shareholder's pocketbooks. |
