NetCom Technologies Inc., an Irvine-based service provider to wireless communications companies, landed $75 million in funding last week from Willis Stein & Partners of Chicago, the second-largest private equity investment this year in Orange County.
NetCom designs, builds and operates cellular towers and provides other services to AT & T; Wirleless, Sprint PCS, Verizon Wireless, Bell South Wireless and others. In the past 13 years, the company has built some 10,000 wireless towers, rooftop antennas and switches. NetCom employs 75 people in Irvine and 200 overall. The company, which does about 20% of its business in Latin America, plans to use the financing to expand its global business and to acquire more companies, said Chief Executive Mario Alvarez. The company also is seeking up to $400 million in senior debt financing, he said.
NetCom recently moved from Laguna Beach to a 23,000-square-foot office in Irvine that Alvarez said the company already has outgrown. He said he’s looking for a new office near John Wayne Airport.
The company plans to expand its workforce to 500 within the year, with most of the hiring being done outside Orange County.
Alvarez and his brother George started the business as Laguna Beach-based architectural firm Albar. The company changed its name to NetCom in 1998. George Alvarez is the company’s chief financial officer.
Also involved in the company are Isidoro Guiterrez, an uncle of the brothers, who is chief administrative officer, and another brother, Ed Alvarez.
NetCom competes against bigger rivals such as Boston-based American Tower Corp., which counted a market capitalization of $7 billion last week, and Houston-based Crown Castle International Corp., whose market value stood at $6 billion last week.
Up to now, the Cuban-American family has grown NetCom through internal financing. Earlier this year, the company approached investment banks to arrange financing, and Newport Beach-based Roth Capital Partners Inc. won the bid.
Roth brought two venture capital firms offering to invest $15 million each, while a third wanted to make a $25 million investment. But NetCom passed on those offers and went with Willis Stein.
“They are looking to do a lot more than finance NetCom,” said Byron Roth, chairman of Roth Capital. “They’re looking at NetCom as a platform to acquire more companies. This is very much a beginning vs. an end.”
One stipulation for the large financing was that Willis Stein gain more than 50% ownership.
“That was the biggest obstacle for Mario,” Roth said.
Alvarez plans to remain CEO and chairman. The five-member board will have two family members, two Willis Stein representatives and a fifth to be selected by the other four directors.
Willis Stein, a private equity investment firm specializing in investments of $75 million and up, also has made placements in Atlanta-based CTN Media Group Inc., Mahwah, N.J.-based Troll Communications LLC and West Palm Beach, Fla.-based Orius Corp.
Willis Stein Managing Director Robert C. Froetscher worked on the NetCom deal and will have a board seat. He previously served as vice president of sales and services for the consumer division of Ameritech Corp., now part of SBC Communications Inc.
The Alvarez family left Cuba in 1967, first heading for Spain and then landing in Miami. Father Mario Alvarez Sr. found “too many Cubans” in Miami, Mario Alvarez said, and wanted a more peaceful environment for his family. They settled on the West Coast, first in Culver City, where they lived in government-subsidized housing.
“Our father doesn’t work here but he is our guiding light,” said Alvarez, 40, who holds architectural degrees from the University of Washington and University of Idaho.
Latin America is a big part of NetCom’s strategy: 80% of its business is in the U.S. with Brazil, Argentina, Peru, Mexico and other Latin American countries making up the rest. Alvarez said he expects the business mix to be 50-50 in a year’s time.
“It’s like going back in time 10 to 15 years,” Alvarez said of Latin America. “It’s an explosive opportunity.”
The NetCom deal is the second-largest private equity investment this year in Orange County, after a second round, $84 million investment in Huntington Beach-based Flashcom Inc. by Palo Alto-based ComVentures and others.
(Aliso Viejo-based Enfrastructure received $100 million in funding earlier this year, though the financing was in the form of strategic investments by IBM Corp. and other corporate backers.)
Roth said the deal is biggest yet for his firm, topping the $40 million it arranged earlier this year for SupplyAccess Inc. of El Segundo. n
