TEOCO, the US cost, routing and revenue management vendor, has sold a minority stake to private equity firm TA Associates. TA Associates are paying USD60m for the investment, but the press release does not clarify what percentage share of the business they acquired.
Dealing with an institutional investor is a major change of direction for TEOCO – which is short for ‘The Employee Owned Company’. The company proudly states on its website that TEOCO “turned down offers for venture capital funding so that we have total strategic control of our business”. Chairman and CEO Atul Jain explained the TA Associates investment by saying:
As a company that has avoided external capital for 15 years, we are delighted to find a partner that will strengthen TEOCO without changing the culture of our organization. We see this as the beginning of a new phase in TEOCO’s history where we look to add even greater value to communications service providers worldwide.
USD60m is a big sum by the standards of the telecoms revenue management sector. Over the past 12 months, talkRA has reported deals like USD17m of VC funding for Connectiva and a USD5m credit facility for cVidya. With shares in market-listed rivals generally down because of the financial upheaval, and Subex recently offering a deal to the holders of their USD180m in FCCBs where they would get more equity for converting their bonds, USD60m for a minority share implies TEOCO is amongst the most valuable enterprises active in this market. The deal gives TEOCO the financial firepower to consolidate rivals or to diversify its offering further. It was almost precisely a year ago that TEOCO acquired LCR vendor Vero. Expect market-changing announcements from TEOCO within the next year.