White Oak returns 23.5x to investors

In a partial exit from its first platform investment, the Atlanta-based firm with deep military contacts has scored a 485 percent IRR from military technology provider DataPath.

White Oak Group, a new Atlanta firm focused on military technology, has realized a 23.5x return from its June 30 partial exit from DataPath, a satellite communications company providing services to the US Department of Defense.

Prior to the private sale, Duluth, Georgia-based DataPath won a $72.9 million contract from the US Army to provide specialized satellite earth terminals and support services for the Joint Network Node Program, which provides portable communications to forces deployed in Iraq.

White Oak first invested $12.1 million in DataPath in September 2004, and has now realized a $200 million profit through the sale. They’ve also maintained $84 million of unrealized value by maintaining a 30 percent share in the company. The sale yielded a net IRR of 485 percent.

While White Oak held the company, DataPath’s revenue grew from $86 million at the time of acquisition to forecasted revenue in 2006 of $350 million.

The firm is now in the early stages of launching a $300 million fund that will focus on acquiring controlling equity positions in companies that serve the Department of Defense, with which the firm’s partners have extensive contacts. The fund will also target companies that serve the Department of Homeland Security, the Central Intelligence Agency and the National Security Agency.

The new fund, a partnership with Chicago-based Guggenheim Partners, will be called White Oak Guggenheim Aerospace and Defense Fund. A source close to the firm said Guggenheim’s partners, affiliates and clients have already committed $50 million to start.

White Oak was co-founded in 2004 by Christopher Melton, a former IBM executive, and Mark Mykityshyn, a former naval aviator and vice chairman of the board of the US Army War College.