With $20.5 Million in Fresh Capital, IPP Prepares To Execute

Walk-in bill-payment provider IPP of America Inc. on Tuesday announced it had raised $20.5 million from three institutional investors, capital that will enable the fast-growing company to expand its physical presence and add more billers to its network. The investment also represents the first round of venture-capital financing arranged by Fairfield, N.J.-based IPP's new chief executive, Ronald W. Averett. Old Lane LP led the funding round with participation from Hamilton Investment Partners LLC and IPP's original venture-capital funder, Edison Venture Fund. The investment firms and Averett are no strangers?all three firms had invested in the bill-pay company Averett once headed, Princeton eCom Corp., now part of Online Resources Corp. The three firms and Averett, who has an undisclosed minority stake, are now IPP's owners. Citigroup Inc. last July bought Old Lane, a $4.5 billion hedge fund and private-equity firm. While Old Lane has representation on IPP's board, its giant bank owner is taking a hands-off approach, according to Averett. About half of the investment, which actually was made at the end of November but not disclosed until today, will go toward buying out IPP's former owners, with the other half providing working capital for expansion, Averett tells Digital Transactions News. “It's pretty much the typical scenario?building the sales team, more marketing and communications, building out the product and building out the technology platform,” he says. High on IPP's to-do list is continued expansion of its walk-in locations, which serve many unbanked consumers. The company had about 7,500 locations late last year but reports about 8,000 now. It's growth plan still calls for 10,000 locations by the end of the year (Digital Transactions News, Nov. 29, 2007), but Averett sees getting more volume out of the current network as more important. “Historically the company's focus has been on the raw number of physical locations,” he says. “The changing focus is on improving the productivity of existing locations.” IPP is addressing that goal by adding four or five new sales staff members, who would bring the total force to about 25, and beefing up marketing. “We've got more feet on the street,” says Averett. The company handled some 10 million transactions last year and is aiming for 12.5 million in 2008. Another major goal is continuing to add so-called authorized relationships in which companies have a direct bill-pay contract with IPP. The company now has about 45 authorized relationships, twice the number of a year ago, says Averett. Direct relationships enable billers to accept expedited payments and give such billers an incentive to promote IPP. The company is especially targeting wireless and satellite-TV providers. Some of the larger authorized partners include EchoStar Satellite LLC's Dish Network, Verizon Wireless, Sprint, T-Mobile USA, and AT&T. While the major development efforts in early 2008 are on the physical locations, the company continues to work on its online-billing capabilities, which when up and running will make IPP an alternative to Fiserv Inc.'s CheckFree unit. According to Averett, IPP is working on the product offering but hasn't settled yet on a “buy or build” strategy. With the new financing, IPP isn't planning on tapping the capital markets again in the immediate future. “Right now, it's about execution,” says Averett.