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Transformations

IT Capital’s transformational group enables investments in carve outs and large cap startups, in industries where MarketPlaces have not yet been created to drive out costs and unlock value.

Our investment philosophy is designed to generate superior total returns through operational transformation. Our investment strategy focuses on building highly profitable growth businesses, and does not rely on debt leverage or expansion of market multiples.  We have a differentiated team with operating, entrepreneurial and investing skills.

IT Capital believes that in the current economic climate superior total returns can be achieved through operational transformation. We invest in partnership with Global Corporations to unlock the value of their essential but non-differentiating operational functions, by converting these functions into independent, profitable businesses. This approach combines operational transformation (to reduce unit cost) with scale (to accelerate revenue and margin).

In current economic conditions, we consider pricing investments based on market multiples to be risky. Instead we price investments based on expected returns in the form of dividends from operating cash flows. We apply proprietary transformation and governance strategies at all stages of our investments. These include proprietary due diligence to assess whether target returns can be achieved through managing operational execution risks; proprietary and patented transformation methodologies based on supply chain optimization; and outcome-based agreements to properly allocate risk and underpin optimal returns.

Finally, we believe that a transformational investment strategy requires not only investment expertise, but also experience in operational transformation and company building. Therefore we have assembled a team of Partners with experience as entrepreneurs, CEOs, and other C-level operating executives, as well as value added investors.

Deal Types

IT Capital's Transformational group invests through two primary deal types: Carve Outs and Large Capitalized Startups.

Carve Out deals create an independent business by carving out an existing cost center from an industry leader – including people, processes and systems. A joint venture is formed with the industry leader, who becomes a strategic co-investor and commits to a guaranteed long-term contract to buy the JV’s services. After formation of the joint venture, cost structures are optimized through IT Capital's unique transformational capabilities. Standardized solutions and services are then created to be sold to the entire industry. Carve outs are designed to deliver immediate P&L and balance sheet benefits to the industry co-investor, while creating substantial exit potential in the form of operational cash flows for all investors.

Large Capitalized Startup deals build new businesses that provide proprietary methodologies and technology-enabled services to address an industry-wide market disruption. Again a joint venture is formed with a strategic industry co-investor, who commits to a guaranteed long-term contract to buy the JV’s services. The joint venture startup then re-defines an existing business process releasing tremendous value. Large capitalized startups are designed to significantly reduce the risks of building new capabilities.

Current Industry Activity

IT Capital is currently designing or implementing MarketPlaces in the following industries:

Aluminum Electronic Components Insurance - Motor Vehicle
Air Cargo Electronic Goods Insurance - Property
Aircraft Spare Parts Emerging Markets Legal
Automotive Farm Land Medical Devices
Banking Payments Fashion Mortgages (commercial)
Beer Food & Process Equipment Mortgages (residential)
Building Industry Food Ingredients Office Supplies
CAD exchange Food Supplies Pharmaceuticals
Carbonated Beverages Fragrances Photography
Car Exchange Fresh Food Post Office
Coffee Government Private Aircraft Charter
Commercial Real Estate Healthcare Protein
Communications Heavy Equipment Recruitment
Computer Support & Maintenance High Speed Internet Retailers Road Freight
Consulting Hotel Provisioning Sea Freight
Consumer Clothing Industrial Goods Semi Conductors - Fab
Consumer Goods Insurance - Casualty Semi Conductors - Fabless
Consumer Products Insurance - Health Steel
Dairy Insurance - Life Yacht Charter