VenCom Group, the private equity firm led by Chicago businessman James Otterbeck, has sold LED lighting company IO to electrical products manufacturer Cooper Industries for $16.65 million (€12 million).
The sale represents a surprisingly large return – VenCom invested approximately $1.85 million total in IO – on an investment made as a favour for a friend in need of seed capital, Otterbeck said.
“Sometimes you get really lucky,” Otterbeck said.
Cooper won a bidding war for the LED company, which was in need of broader sales and distribution channels, as well as access to cheaper manufacturing, Otterbeck said.
VenCom’s only capital source is Otterbeck, who says the company does both private equity- and venture capital-style deals, usually investing between $5 million and $22 million for a controlling stake in a company.
“We typically have $50 million to $100 million in play at any given time,” he said.
VenCom has traditionally focussed on the communications space, because of Otterbeck’s background; as former head of global communications for Gemini Consulting, he worked with senior management at companies including SBC, Verizon, British Telecom, South Africa Telecom and Telenor.
In 2000, VenCom sold OnePoint Communications, a company founded by Otterbeck in 1995, to Verizon for $250 million. Following the sale, Otterbeck was had a passive role in VenCom and for three years was Verizon’s senior vice president of emerging markets.
The 13-year-old investment firm is increasingly moving into the healthcare space – Otterbeck named its Arizona-based pharmacy services company OnePoint Patient Care in honour of the portfolio company it sold to Verizon for “good karma”. The firm also has real estate-related holdings in its portfolio.