PEHUB.com: Asset International, Backed by Austin Ventures, Looks To Buy (but outside the U.S.)
PEHUB.com l March 28, 2011 l By: Luisa Beltran
Companies that provide data to fund firms aren't the sexiest investments.
But Austin Ventures took a chance in early 2009 when it backed Asset International. Austin had just finished raising $900 million. The financial markets had crashed and investing in Asset International was considered a risky play.
"At the time, no one was looking to invest in institutional finance," says Jim Casella, Asset International's chairman and CEO. "You had to hold your breath. We decided to invest when everyone else looked away."
Casella and Austin Ventures soldiered on and launched AI, which was then known as Case Interactive Media. It's unclear how much Austin put into the deal. The investment came from Austin's ninth and tenth fund on the growth equity side. Austin has committed to spend $100 million on AI, Casella says. "We haven't spent that on the equity side," he says.
Case/AI has bought four companies: Strategic Insight, Plan For Life, The Trade and Asset International. Most specialize in providing data and research to fund firms, although AI does have print titles like PLANSPONSOR and PLANADVISER.
"They are all profitable," says Casella, who is the former CEO of Reed Business US. He left in 2007 and joined Austin Ventures as a CEO-in-residence for their growth/private equity practice.
Revenue for Asset International is north of $50 million and will soon approach $100 million, Casella says. "The deals have turned out well," he says.
To be sure, data providers that cater to asset managers like BlackRock or Fidelity aren't the most exciting. "When you sell for teen multiples you don't need to be sexy," says one banker, who estimates that proprietary data businesses can go for 12x to 15x.
Casella isn't adding scale for the sake of adding scale, the source says. "He's building the business in the right way," the banker says. "He's buying the right businesses which are more data driven."
Asset management has also recovered from the crash of 2009. The sector is growing, particularly on a global basis, Casella says. During the downturn, bond funds showed significant inflows while equities reported outflows. This switched in fourth quarter, Casella says. PIMCO, a bond fund giant, also announced in January a new fund line in equities. "People feel it's a good time to get into equities," he says.
It also helps that there aren't 20 to 30 companies competing to provide data to asset managers, Casella says. Morningstar and Lipper, which is owned by Thomson Reuters, which is also the publisher of peHUB.com, are significant players.
Stamford, Conn.-based Asset International is now looking to buy outside the U.S. In fact, Asset International has a deal in the works to buy a firm that will complement its recent acquisition of Plan For Life, an Australian provider of mutual fund business data. Asset International typically invests $15 million to $50 million per deal but has the capacity to do larger purchases, Casella says. The company also has a relationship with Goldman Sachs Special Situations Group to provide leverage.
"We will only look at profitable companies," Casella says. "We won't buy anything that doesn't have positive cash flow."
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