[November 12, 2008]

Chattanooga: 2 equity firms buy majority share in VIPGift

(Chattanooga Times (Free Press, TN) Via Acquire Media NewsEdge) Nov. 12--The owner of a Chattanooga-based gift card and incentives business has sold a majority share of the company to two private equity and venture capital firms.

A. Hamid Andalib, who also used to own The Loft restaurant, sold the stake in the business to Summit Partners and Bridgescale Partners.

J.J. Kardwell, a principal with Summit Partners, declined to reveal the investment in the business that offers corporate and consumer incentive programs to Fortune 500 companies, but he called the amount substantial.

"At this point we are not sharing any details on the exact dollar amount, but it is sufficient to say we made a substantial majority investment in the company," he said. "It is a growing, profitable business."

Mr. Andalib said in a statement he will remain on the company's board and act as an adviser. Richard Char, who is associated with Summit Partners, will become the new president.

"Under the leadership of Richard Char and his experienced management team, VIPGift is positioned to become the industry leader in the near future," Mr. Andalib said. "I remain inextricably tied to my VIPGift family and am completely committed to assisting Mr. Char in taking the company to the next level while providing a great future for our employees."

Mr. Char praised Mr. Andalib's ability in building the company into a leader in the prepaid incentives business in just five years.

"With the financial support of Summit Partners and Bridgescale Partners, I believe VIPGift can further establish its leadership in this fragmented market," he said.

Staying in city

Officials said the company will remain headquartered in Chattanooga, and they hope to eventually expand the more than 100-employee work force currently at the Cherokee Boulevard facility.

"We would hope that we will grow as the company continues to grow," Mr. Char said.

He said officials at Summit Partners became interested in companies in the incentives and gift card business and researched numerous businesses before approaching VIPGift.

"We began evaluating companies in this space," he said. "Of all the companies we saw, VIPGift was the one best suited to serve as a platform to build a leadership company in the prepaid incentives space."

VIPGift also has an office in Atlanta, as well as sales staff in Nashville, Chicago, St. Louis and Kansas City, Mo.

Clients use VIPGift's products and services for customer acquisition and retention programs, employee incentive and reward programs, marketing initiatives, and consumer rebate programs.

VIPGift's array of customized rewards -- including points, certificates, and prepaid card based programs -- have helped position the company as a market leader, according to the business.

"VIPGift's brand equity and reputation for great customer service is second to none in the incentive industry," said Mr. Kardwell. He declined to release VIPGift's annual revenue.

Summit Partners, founded in 1984, has raised more than $11 billion in capital and has provided equity, recapitalization, and management buyout financing to more than 300 companies across a range of industries. It has offices in Boston, Palo Alto, Calif., and London.

Bridgescale Partners is a Silicon Valley-based firm that invests in U.S.-based, technology-enabled companies. Bridgescale's investment focus includes growth equity in corporate spinouts, venture-backed and bootstrapped companies, middle market private equity investments, and management-led buyouts.

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