CityNet raises $275M for building fiber optic networks
The Carlyle Group leads the group of five premier investment funds, including Berkshire Partners, Trimaran Capital Partners, Great Hill Partners and Fay Richwhite. CityNet's first round of investment was $100 million in April 2000, and included investments by Telecom Partners, Crescendo Ventures and CIBC Capital Partners.
Founded in 1999, CityNet deploys last-mile fiber optic networks through a city's existing sewer system, avoiding many of the problems associated with traditional trenching construction. CityNet installs fiber networks and then leases them to telecommunications companies, Internet and network service providers and others that offer high-speed services. CityNet is the first broadband infrastructure company to deliver this last-mile dark fiber solution on a wholesale basis.
"We are privileged and honored to have these five new partners join our pioneering efforts in building what is considered the last -- but critically important – piece of fiber optic network infrastructure – the last-mile," said Robert G. Berger, CityNet's Chairman and Chief Executive Officer. "This new investment fully funds CityNet's build-out plans, and demonstrates a strong confidence in our company and its sole focus on bringing fiber optic connectivity directly into buildings."
Bruce Rosenblum, Managing Director of The Carlyle Group said: "We're delighted to be part of a truly innovative company, with a first-class management team and strong financial backing by some of the leading funds in the telecom business. From day-one, CityNet impressed us with their vision, business plan and dedicated focus on filling a critical need in the broadband infrastructure market," Rosenblum said.
The last-mile is the gap in the all-fiber optic broadband network – currently occupied by older and slower copper wires – between end-user buildings and the much larger "beltway" fiber optic networks that circle around and through cities. Bridging this last mile gap has been a major obstacle to the fast and cost-effective deployment of broadband service. CityNet's mission is to begin unclogging the copper bottleneck by replacing it with the gold standard of broadband communications mediums: fiber optics.
"The Carlyle Group and our other investors have all been financial leaders when it comes to investing in telecommunications and broadband companies," said Debra Hoopes, CityNet's SVP & Chief Financial Officer. "They understand that our last-mile focus is unique and that the market opportunity is tremendous."
Experts agree that one of the greatest obstacles to the rapid deployment of broadband Internet, voice and data services is the need to rip-up streets to lay fiber optic cable, a critical problem in cities around the world. CityNet is able to avoid the problems associated with trenching, by deploying its last-mile fiber optic networks through a city's sewer pipes using SAMsm, CityNet's leading-edge computer-controlled robot. CityNet's exclusive partner Ka-Te Systems AG of Zurich, Switzerland manufactures the robots.
CityNet uses another patented, fiber deployment technology, for larger, man-accessible sewer pipes, made by its exclusive partner CableRunner North America LLC, a subsidiary of the Vienna, Austria Water & Sewer Agency. The company's other last-mile partners include Alcatel, a global leader in fiber optics, telecommunications and networking, which provides the fiber cables, special conduit and other connectivity solutions; and Carter & Burgess, one of the premier architecture, engineering, and construction management firms in the U.S., that helps CityNet manage the design and construction of its networks.
CityNet has already signed landmark license and access agreements with three cities – Indianapolis, IN, Albuquerque, NM and Omaha, NE. The company has just signed an agreement with its first European city, which it will be officially announcing within the next few weeks. CityNet is negotiating similar agreements with approximately 28 other U.S. and European cities.
ABOUT CITYNET
Founded in 1999, CityNet is a leading broadband infrastructure company that builds carrier-class last-mile fiber optic networks. The company uses a revolutionary but proven in-sewer deployment method to build its networks in cities across the U.S. and internationally. As a wholesale carrier's carrier, CityNet provides telecom carriers and network service provider customers with all-optical high-speed connections directly into commercial and residential multi-tenant buildings, thereby Bridging the Last-Mile DivideSM that exists for these carrier customers and, ultimately, end-users of broadband services. For more information on CityNet, visit www.citynettelecom.com.
ABOUT THE CARLYLE GROUP
The Carlyle Group is a Washington, D.C. based global private equity firm with over $12 billion of capital under management. The firm conducts its investment activities through focused industry groups, including: Communications, Aerospace & Defense, Information Technology, Healthcare, and Real Estate. Since 1987, The Carlyle Group has invested over $5.8 billion of equity in transactions with an aggregate acquisition value of over $16 billion. For more information, visit www.thecarlylegroup.com.
ABOUT BERKSHIRE PARTNERS
Berkshire Partners is an active investor in the private equity market managing $1.8 billion of capital. Through its 15-year investment history, Berkshire has completed 70 acquisitions or growth capital investments with a primary focus on building solid, growth-oriented companies in conjunction with strong, equity-incented management teams. For more information, visit www.berkshirepartners.com.
ABOUT TRIMARAN CAPITAL PARTNERS
Trimaran Capital Partners is a New York based investment firm that manages over $4 billion in assets. Previous investments by Trimaran Fund II, its $1 billion private equity vehicle, and its predecessor fund include Global Crossing, SEAT Pagine Gialle, SpectraSite Holdings, Telebanc Financial Corporation, Petersen Publishing, IASIS Healthcare & Village Voice Media.
ABOUT GREAT HILL PARTNERS
Great Hill Partners is a leading Boston-based investment firm that provides equity financing and strategic guidance to data communications, IT infrastructure, telecommunications, media, information, education and business service companies. Recent investments include CityNet, Interelate, K-Solutions, ManagedStorage International (MSI), ManagedOps.com, Dame Broadcasting, Edge Connections, High-Tech Institute, SmartMail, DURO Communications and Horizon Telecom International. The firm has over $1 billion in capital under management from institutional investors including leading commercial and investment banks, state and corporate pension funds, university endowments and private trusts. For more information, visit www.greathillpartners.com.
ABOUT FAY RICHWHITE
Fay Richwhite is a private equity firm based in Geneva, Switzerland. During the last decade, Fay Richwhite has actively invested over $1 billion in companies in Australasia, USA and Europe. Previous investments include the privatization of New Zealand Telecom with Ameritech and Bell Atlantic. Fay Richwhite has a joint venture with Berkshire Partners to pursue European investment opportunities.
ABOUT TELECOM PARTNERS
Telecom Partners III, L.P., a $500 million venture capital fund, focused on start-up and early stage investments in communications service providers operating in the areas of broadband last mile networks, internet applications, and wireless networks in both domestic and international markets. TP anticipates demand changes in the communications industry and starts new businesses on its own or with other value-added investors to capitalize on these demand changes. They invest in companies where they can be actively involved in influencing corporate operating strategies, building management teams and supporting future capital raising efforts. Telecom Partners focuses on building large-scale enterprises that each have the potential to achieve an exit value equal to the fund's total commitments. The focus and investment strategies of Telecom Partners continue to capitalize on the increasing demand for high speed access and unique services in the communications industry. For additional information on Telecom Partners, please visit www.telecompartners.com.
ABOUT CRESCENDO VENTURES
Crescendo Ventures is a global venture capital firm that accelerates the growth of companies by providing seed and early-stage funding in communications and Internet infrastructure. A new breed of venture capital firm, Crescendo Ventures collaborates with and supports entrepreneurs, using its industry expertise and personal approach to nurture promising ideas and companies to their full potential. Founded in 1993, Crescendo Ventures manages more than $1 billion from its headquarters in Palo Alto, California and offices in Minneapolis and London. For additional information on Crescendo Ventures or their portfolio, please visit www.crescendoventures.com.
ABOUT CIBC CAPITAL PARTNERS
CIBC Capital Partners is a leading North American merchant bank and part of CIBC World Markets, Canadian Imperial Bank of Commerce's investment bank. CIBC Capital Partners is invested in over 200 companies and in approximately 100 private equity funds around the world, with total commitments in excess of $5 billion. CIBC Capital Partners' merchant banking activities include private equity investments in venture capital, leveraged buyouts, and other special situations. CIBC Capital Partners venture capital investments are primarily focused on the telecommunications, technology, and healthcare industries. Merchant banking professionals are located in New York, Menlo Park, and Toronto. Canadian Imperial Bank of Commerce is one of the largest banks in North America with significant retail, electronic banking and investment banking operations. For additional information on CIBC Capital Partners, please visit www.cibcwm.com.
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