Vermont Business Magazine Vermont and the entire Northeast have experienced vigorous consolidation of telecommunications firms, especially of fiber optic carriers, with Oak Hill Capital Partners being one of the major players. FirstLight Fiber was sold to Oak Hill in September. In August, Oak Hill acquired Sovernet. Oak Hill bought FirstLight Fiber from private equity owner Riverside Partners, which is also investing in the deal and will continue as a minority investor in FirstLight. Financial terms of the transaction were not disclosed. It is expected to close in early 2017.
FirstLight is a leading fiber-optic bandwidth infrastructure services provider operating in New York and Northern New England. Sovernet is a Bellows Falls-based telecom provider, which also offers "middle mile" fiber, mostly to schools and government. In 2010 it received a $33.4 million federal stimulus to build a fiber-optic network in Vermont.
Oak Hill is combing the operations of Sovernet with FirstLight. FirstLight's local headquarters is in Williston.
“The acquisition of FirstLight is a key component of Oak Hill’s strategy,” said Benjy Diesbach, a Partner at Oak Hill. “FirstLight’s strong history as a leading fiber provider in the Northeast and its positive momentum were a few reasons we identified the company as an attractive platform. We welcome the opportunity to support and guide FirstLight in its next stage of growth.”
Oak Hill acquired Oxford Networks, a fiber optic service provider operating in Maine, New Hampshire and Massachusetts, from private equity firms Novacap and Bank Street Capital Partners in July. Oak Hill intends to combine Oxford, FirstLight Fiber and Sovernet.
“Oak Hill is a highly respected private equity firm, and I speak for myself as well as the other members of FirstLight in saying that we’re excited to become an Oak Hill portfolio company,” said Kurt Van Wagenen, President and Chief Executive Officer of FirstLight. “Oak Hill provides the expertise and financial resources we need at this stage, and together, our potential to continue to meet our customers’ growing connectivity needs is limitless. We also thank Riverside Partners for their support and guidance along this path.”
FirstLight originally started as an Albany, NY-focused fiber provider and expanded through the acquisitions of segTEL in New Hampshire, TelJet in Vermont and G4 in New Hampshire. During Riverside’s investment period, FirstLight expanded its fiber route miles from 199 miles to over 2,500 miles and today operates a network of nearly 275,000 fiber miles with over 2,000 on-net locations and 14,000 near-net buildings.
“We are extremely proud of all we have accomplished with the FirstLight management team. To have been a part of this company’s impressive growth is gratifying for Riverside Partners, and we look forward to working with Oak Hill to guide FirstLight’s next stage of growth,” said Steven F Kaplan, General Partner at Riverside and Chairman of FirstLight’s Board of Directors.
“Today, we are excited to formally launch Oak Hill’s strong new partnership with FirstLight management and Riverside. Together, we plan to accelerate FirstLight’s growth through additional investment, including Oak Hill’s pending acquisitions of Oxford Networks and Sovernet Communications. We look forward to many more positive developments for FirstLight,” concluded Scott Baker, a Partner at Oak Hill.
The FirstLight-Sovernet merger will combine Sovernet’s high-capacity network transport, broadband Internet, and voice services with FirstLight’s complete portfolio of data, Internet, data center and voice services, which are backed by strong, locally-based service and support.
Along with Oak Hill’s other strategic transactions, including Oxford Networks, the combined companies will operate a total of approximately 9,500 route miles of high-capacity, fiber optic network and eleven data centers across New England and New York.
Sovernet was acquired by Atlantic Tele-Network (ATN) in 2006 and has operated as a subsidiary of the holding company. Sovernet subsequently bought NY-based Independent Optical Network (ION) of Albany, NY.
Sovernet’s President and CEO Richard Kendall said, “Sovernet has become a regional leader in high-capacity network transport, broadband Internet and voice services, but this transaction will allow us to do even more to serve our customers. We achieved much in 21 years through a combination of dedicated staff, constant reinvestment in the network and remarkable long-term customer relationships. All of these things will continue as we begin a new chapter with FirstLight, which shares our commitment to excellence and is ready to take us to new heights.”
Sovernet employs 70, but their future status, once all the transactions are completed, is not yet known.
Sovernet complements FirstLight's services and once combined will reach further into Vermont, New Hampshire and New York, to provide high quality, broadband, fiber-based services to more businesses and carriers located in this region.
FirstLight Fiber acquired New Hampshire-based G4 Communications in October 2014, including G4's customer base and data center located at 77 Sundial in Manchester, NH.
Founded in 1995, Sovernet is a leading regional provider of data center, high-capacity network transport, broadband Internet and wireline voice services throughout a 4,500 fiber-mile footprint in northern New England and New York. Sovernet and its Albany, New York-based subsidiary, ION, provide services up to 100 Gbps to enterprise, carrier and government customers throughout the New York and northern New England region. The company is headquartered in Bellows Falls, Vermont with facilities in New York, Vermont and southwest New Hampshire.
FirstLight Fiber, headquartered in Albany, New York, provides fiber-optic data, Internet, data center and voice services to enterprise and carrier customers in New York and Northern New England with connectivity to Canada connecting 2,000 locations in service with an additional 14,000 locations serviceable by our 260,000 fiber-mile network. FirstLight offers a robust suite of advanced telecommunications products featuring a comprehensive portfolio of high bandwidth connectivity solutions including Ethernet, wavelengths and dark fiber as well as dedicated Internet access solutions, data center services, and voice services such as SIP trunks, virtual PBX, and traditional TDM solutions. FirstLight’s clientele includes national cellular providers and wireline carriers and many leading enterprises, spanning high tech manufacturing and research, hospitals and healthcare, banking and financial, secondary education, colleges and universities, and local and state governments.
Oak Hill Capital Partners
Oak Hill is a private equity firm managing funds with more than $9.0 billion of initial capital commitments since inception from leading entrepreneurs, endowments, foundations, corporations, pension funds, and global financial institutions. Over the past 30 years, the professionals at Oak Hill and its predecessors have invested in 81 significant private equity transactions across broad segments of the US and global economies. Oak Hill applies an industry-focused, theme-based approach to investing in the following sectors: Consumer, Retail & Distribution; Industrials; Media & Communications; and Services. Oak Hill works actively in partnership with management to implement strategic and operational initiatives to create franchise value.
Founded in 1989, Riverside Partners is a middle market private equity firm currently investing Riverside Fund V, L.P. The fund focuses on growth-oriented companies primarily in the healthcare and technology industries. Riverside Partners is particularly experienced at partnering with founders, owners and management teams and it brings substantial domain expertise and operating experience to its portfolio companies. Today, Riverside Partners manages about $850 million of equity capital and seeks to make investments in companies with revenues between $20 and $200 million and with $5-$25 million of EBITDA.
The Bank Street Group LLC served as FirstLight’s exclusive financial advisor in connection with this transaction. Choate Hall & Stewart served as legal counsel to FirstLight in connection with this transaction. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel to Oak Hill. TD Securities (USA) served as financial advisor to Oak Hill.
Q Advisors, LLC served as financial advisor to ATN, the parent company of Sovernet, and Mintz Levin Cohn Ferris Glovsky and Popeo, PC acted as legal counsel. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel to Oak Hill. The transaction is expected to close by early 2017, following the satisfaction of customary regulatory approvals.