February 13, 2001 -- Compaq has entered the investing business, but with a twist. Unlike VCs (Venture Capitalists), Compaq Financial Services (CFS) is looking for mature US-based service providers who have equipment financing needs.
CFS, a wholly owned subsidiary of Compaq Computer Corp., formed a $300 million financing facility with Banc One Capital and Heller Financial. CFS' expertise in structuring service provider financing arrangements combined with the strength of two high-powered financial institutions offers a risk-sharing structure for large-ticket funding for Internet infrastructure development. This facility expands our ability to provide service providers with an option for financing acquisitions of Compaq technology while giving Compaq and its shareholders, as well as our financing partners, the tools to prudently manage the risks of participating in this fast-evolving sector, said Irv Rothman, CFS president and CEO.
CFS understands that the current economic downturn marks the end of the initial developmental stage for Internet infrastructure. The next stage is set to emerge. Recent developments in the financial markets may have limited traditional funding sources for Internet-related companies. Nonetheless, significant opportunities still exist for forward-thinking lenders to support well-managed service providers that will be the Internet backbone of tomorrow, said Rothman. Compaq clearly wants to be a central vertebrae in that backbone.
Newbies need not apply, though. CFS only considers companies in the post-IPO development stage. Additionally, to qualify a company must be an Application Service Providers (ASPs), Hosting Service Providers (HSPs), or Network Service Providers (NSPs) that use Internet technology to provide 24x7 access and hosting services from centrally managed facilities to other service providers and/or end customers.
The new facility reflects Compaq's strategy to nurture service providers as the Internet infrastructure expands. It is a very important growth segment as corporate and small-to-medium size organizations increasingly use their services, said Peter Blackmore, Compaq executive vice president of sales and services. SPs are in need of technology, services and financing to meet around-the-clock demands in this market.