Japanese Internet services provider Global OnLine Japan (GOL) announced last week that it has secured a “substantial” infusion of private equity capital from international investment group J.H. Whitney & Co.
The agreement makes Whitney, a leading US-based development capital provider with a portfolio of some 60 investments, including 8 Internet-related companies, a “significant shareholder” in GOL.
GOL, launched in 1994, was an early entrant in the Japanese Internet ISP market.
With access points in 17 major cities, more than 20,000 dial-up subscribers and 3,000 corporate clients, and an 80-person staff, it is the largest privately held Internet solutions company in Japan.
GOL intends to use the investment to expand and enhance its five core business areas: Internet access, Web site design, e-commerce business support, systems integration, and telecommunications services.
“GOL is cash-flow positive, and growing; we did not need to take in additional capital,” said GOL founder and president Roger Boisvert. “Whitney brings a lot more than simply money.”
“We have searched for the past three years to find the kind of blue-chip funds that bring with it introductions, process toward an IPO, valuable financial guidance, and a cooperative atmosphere. We found all we were looking for with J.H. Whitney.”
“With the support and guidance of J. H. Whitney, we can ramp up growth, invest into our five different business areas, and really begin scaling this company,” Bosivert added.
Neither party would confirm the amount of the investment, but according to an informed source, the amount was “in the multi-million dollar range, and it does give Whitney a significant percentage of GOL. But control still rests in Boisvert’s hands.”
Bosivert has been a pioneer in Japan’s Internet access industry.
He left McKinsey & Co. Japan in 1993 to establish Japan’s first government-authorized public access ISP, and was instrumental in launching the nation’s first commercial Internet connection in September of that year.
When that company was purchased by US-based PSINet in 1994, he created GOL as the first privately held ISP in Japan to have its own international leased lines.
GOL has scored several other “firsts” under Boisvert’s leadership, including first in Japan to offer flat-rate access, first to provide global roaming support, and first to launch a real-time e-commerce website.
GOL expanded its ISP business in 1998 by acquiring the customer bases of three other Tokyo-based ISPs — Cyber Technologies, InJapan, and Internet Access Center — and is currently rumored to be in process of acquiring at least two additional ISP customer bases.
GOL’s Web-development division, Nvision, specializes in new media development services, from design, programming, and online databases to e-commerce and marketing support.
Through Nvision, GOL has developed Web sites for numerous corporate, media, and entertainment clients, including the August 1998 launch for Polaroid Corp. of the first Japan-based e-commerce site to offer real-time, continuous automated processing of online credit card purchases.
For GOL, the investment by Whitney represents both a key to rapid expansion and an affirmation of its role as the leading independent player in the Japanese Internet market.
“J. H. Whitney not only brings a great deal of world-class business and financial expertise to our company; their investment is a reflection of how much we have achieved to date, and the potential for our business going forward,” said Christopher Phelan, GOL’s chief operating officer.
GOL has said it will work with Whitney “on several strategic initiatives, including the preparation of a potential initial publicoffering [IPO] within the next two years.”
To date, Whitney has been instrumental in successfully taking more than 50 companies public.
Asked whether the planned IPO would be in Japan or the US, Boisvert said, “Whichever market is right at the time.”
“The name ‘global’ is important,” he added. “GOL was not intended to be a Japan-only provider of Internet-related services. It will be multi-national, with a focus toward Asia.”