Available Funds: New investment group to back DMers
A recent infusion of $18.9 million signaled the green light for fine art publisher and direct marketer Atelier to move forward with plans to expand its marketing channels and product line.
Like many DMers, Atelier hoped to transform itself from a traditional direct marketing business into one wielding a forceful Internet marketing channel. All it needed was the cash.
Atelier received the first investment awarded a company by the $100 million private equity fund, Direct Equity Partners (DEP), established specifically to invest capital in direct marketing and e-commerce companies.
“We’re what you’d say is the first jewel in the crown,” says Atelier founder and CEO Harvey Kalef.
The fund was launched by investment banking firm Gruppo, Levey & Co. together with Madison Dearborn Partners, a Chicago-based private equity investment firm that committed the $100 million in capital to the fund.
Designed to capitalize on the rapid convergence of the DM and e-commerce industries, the fund invests in a broad range of companies eager to gain a foothold in the dot-com world and online firms that recognize the need for traditional DM expertise. Investments include opportunities in growth equity, recapitalization, restructuring, mergers, consolidation, acquisitions and refinancing.
Patricia Campbell has been named president and managing director of the fund. Previously, Campbell served Barnesandnoble.com as vice president of interactive marketing and in 1998 was the Direct Marketing Association’s chair. Her responsibilities include identifying investment opportunities and providing strategic and management services to the selected companies.
DEP plans to invest in three to six companies this year, each receiving an average $10 million to $20 million.
Campbell says that while classic venture capital investments are often confined to a monetary investment, DEP also brings the collective expertise of its principals, which actively participate in strategic marketing and operations planning to help develop the firms.
“Anything [a company] can do to get up the learning curve with fewer mistakes is of huge value to that company,” Campbell says.
Should all go as planned, Madison Dearborn is expected to commit further capital.
“While our initial funding commitment is $100 million, we have every reasonable expectation that our ultimate commitment of capital will be significantly in excess of that amount,” says Benjamin Chereskin, managing director of Madison Dearborn.
In its Atelier investment, DEP joined with private equity firm Blackburn Group, of London, Ontario, to invest the $18.9 million. The two firms now hold a majority interest in Atelier.
Atelier, based in Markham, Ontario, owns a proprietary “brushstroke” technique that has the ability to capture and reproduce original oils on canvas. While the product had been marketed solely to consumers via direct mail and catalogs, the infusion of funds will allow Atelier to pursue marketing goals via the Internet and in business-to-business.
For example, Kalef recently started a corporate division to target BTB companies via direct mail and through its Web site, www.atelieramerica.com, which Kalef plans to “dramatically” improve. Upgrades include the capability to capture customer data, link to other major sites such as museums, accept orders online and upload the imagery from its entire product line.
In addition, Kalef plans to expand its offerings to include small gifts and gift cards using the same proprietary technique.
