100 Million Reasons To Be An ASP
On May 3, 2000, Interpath, Inc., a wholly owned subsidiary of Carolina
Power and Light (NYSE: CPL, CP&L) announced it will change ownership and
receive a $100 million equity investment in a spin-off deal between Boston-based
Bain Capital (a $7 billion private equity fund) and CP&L.
move designed to unlock the full-service Application Service Provider's
(ASP) market value, CP&L and Bain will each invest $50 million for a total
of $100 million of new equity to aggressively grow Interpath's ASP business.
Bain will provide strategic and operational expertise to enable Interpath
to leverage its position in the ASP marketplace. Upon completion of the
transaction, Bain will own 65% and CP&L will own 35% of Interpath. CP&L
will retain the fiber optic network assets owned by Interpath, about 50
employees and its 10% limited partnership interest in the BellSouth PCS
business. The remaining 450 employees will be retained by the Bain-owned
Interpath to service the company's ASP and Data Services operations.
in January 1998, Interpath offers a variety of enterprise, e-commerce
and messaging applications based on applications from Vignette, SAP, Microsoft,
Netscape, and BroadVision. The full-service business addresses e-business
and e-readiness consulting, design and development services, and 24x7
application management and hosting. Interpath will continue to support
those applications via its Interpath Operation Center (IOC).
Over the past fifteen years, Bain has established a track record in the
public equity capital markets, having completed IPOs for its portfolio
companies exceeding $25 billion in market capitalization. Bain has experience
investing in technology companies including Internet infrastructure, content
and services companies. Recent technology and telecom investments include
Double Click, eCredit.com, SEAT, USLEC, Therma-wave, Integrated Circuit
Systems, Net Library, and many others.
the start of 2000, Interpath has been signing up customers at a rapid
pace, continuing to gain traction in the enterprise ASP marketplace. New
ASP agreements - including the deals with Sagent Technology, Ericsson,
Centura, First Union Mortgage, MBNA, eIRAnet and mainstreetweek.com -
have totaled more than $7 million in Q1 2000.
market estimates ranging from 20 to 40 billion by 2003, ASP solution providers
are steadily gaining momentum. The infusion of $100 million will help
Interpath establish itself within the ASP market. Similar merger/acquisitions
such as the recent purchase of Verio (39% stake holder in Agilera.com)
by Japan's NTT Corporation indicate heavy infusions of capital to the
ASP market. As companies begin to recognize reduced TCO (total cost of
ownership) and enhanced return on investment the market will expand, thus
fueling further ASP investments.
As a provider of Vignette, SAP, Microsoft, Netscape and Broadvision products,
Interpath may be worth investigating if your company is considering an
outsourced solution. Of particular interest is how they intend to utilize
the infusion of capital. Will they improve or increase existing support
mechanisms? Will majority be spent on sales and marketing initiatives?
What infrastructure resources are offered? Will they attempt to address
all areas? This information may provide a formidable comparison tool when
evaluating outsourced applications.