Mezzanine financing transactions can support various types of businesses and purposes. In this article we look at an example of $15 million mezzanine financing provided by BDC Capital to an Ottawa, Canada-based global technology services company Pythian.
Target company overview
Pythian is a global technology services company that helps businesses compete by adopting disruptive technologies such as advanced analytics, big data, cloud, databases, DevOps, and infrastructure management to advance innovation and increase agility. Specializing in designing, implementing, and managing systems that directly contribute to revenue growth and business success, Pythian’s highly skilled technical teams work as an integrated extension of our clients’ organizations to deliver solutions that enable the strategic use of data, accelerate software delivery, and ensure reliable, scalable IT systems.
Founded in 1997, the company has clients around the world, including well-known names such as American Apparel, Fox Sports, Giant Tiger and National Geographic.
The firm employs a total of about 400 people in more than 30 countries, including 100 at its corporate headquarters on McRae Avenue. In addition to its new London office, Pythian also has foreign offices in New York, San Francisco, Sydney and Hyderabad, India. In 2017 the editors of Canada’s Top 100 Employers named Pythian one of the country’s top small and medium-sized employers for the fourth consecutive year.
Throughout its historty, Pythian has been primarily funded with operating profits. This mezzanine round is only the third financing round in Pythian’s 20-year history. All of the previous rounds were also arranged with BDC Capital.
Use of proceeds
Proceeds will be used to invest in strategic areas of growth for the company as well as to repurchase shares from some long-term shareholders. In addition to the $15 million, BDC Capital refinanced an existing $5 million facility so that both loans mature at the same time.
The company says it will use the cash to expand its cloud-based and big-data analytics services as well as hire more people at a new satellite office in London it opened to serve the lucrative European market. Pythian says revenues from the European region have increased by more than 150 per cent over the past year.
Pythian and BDC Capital have been partners for ten years, and we appreciate their entrepreneurial approach and ongoing enthusiastic support. These funds will enable us to increase our investment in a number of key growth areas including Cloud, Analytics and further geographic expansion into Europe.
Paul Vallée, Pythian’s CEO
Mezzanine funding provider
With more than $2 billion under management, BDC Capital is the investment arm of BDC, serving as a strategic partner to Canada’s most innovative and high-potential firms. It offers a range of equity, venture capital and flexible growth and transition capital solutions to help Canadian entrepreneurs scale their businesses into global champions. To find out more, visit bdc.ca/capital.
Pythian has exceeded our expectations by multiplying its revenue by ten since our first investment. With prestigious international clients and employees based in more than 40 countries, this Canadian company is already making its mark on the worldwide IT services market. In our view, Pythian is well positioned to grow more prominent globally in the coming years.
Cyril Cochrane, Ottawa Managing Director, Growth & Transition Capital at BDC Capital
References and useful links
- Pythian home page
- Press release
- BDC Capital
- Ottawa’s Pythian to bolster European operations with $15M financing round – Ottawa Business Journal