Zayo (NYSE: ZAYO)
M/C Partners was a founding investors in Zayo (NYSE: ZAYO), a fiber network consolidation platform formed in 2007 to consolidate underdeveloped regional fiber properties throughout the United States. Today, the company is the largest pure play broadband infrastructure provider in the US, providing fiber-based transport services to carriers and enterprises. Zayo has acquired 32 companies since inception and amassed a sizable asset base of 81,000 route miles of fiber connecting more than 16,000 buildings, including 37 data centers, in 308 markets around the world.
The initial plan for Zayo was developed after the highly successful restructuring of ICG Communications, a distressed telecom company that M/C and Columbia acquired in 2004 for $8.7 million and backed Dan Caruso, former founding executive of Level 3. At the time of acquisition, ICG was burning $8 million of cash a month and had $35 million of cash on the balance sheet. Dan and his team quickly restructured the business, cutting the cash burn and repositioning the company for growth. Upon exiting, ICG in 2006, M/C and Dan recognized that growth had returned to the fiber industry and there was a tremendous opportunity to take a leadership position in highly fragmented market comprised of undercapitalized fiber assets. In early 2007, M/C, Columbia and Dan Caruso, developed a plan to create Zayo.
Zayo is a story of superior management execution. The Zayo team operated at a relentless pace out-executing the previous management teams of acquired assets, accelerating growth and significantly improving operating margins. To date, Zayo has acquired 32 companies and in October 2014, Colorado-based Zayo had its enormously successful IPO, raising more than $400 million.
- M/C Partners and Columbia Capital founded the company in 2007
- Investment team recognized before anyone else that there was a tremendous investment opportunity in the market
- Co-led initial equity raise of $184 million with a $50 million commitment
- Built a broadband infrastructure provider of significant scale through consolidation and organic growth to capitalize on accelerating bandwidth demand driven by the increasing consumption of high bandwidth applications such as video, enterprise storage backup and wireless data transport.
- Premiere fiber management team in the country led by Dan Caruso drives M&A activity and rapid, efficient integration (average integration completed within 6 months). Strong pro forma EBITDA growth of over 25% in the last five years and rapid payback of new capital deployed (typically under 12 months).