Wireless spectrum is the lifeblood of the mobile industry — everyone needs it, and everyone wants it. So by cobbling finite spectrum assets together and selling them off to carriers — who need spectrum the most — you can make a nice buck.
For instance, NYC-based Catalyst Investors just doubled its money in a few years — for a 38% annualized return — by flipping tens of millions of dollars worth of wireless spectrum.
It accumulated the airwaves by buying up debt in bankrupt companies, equity in others, etc., over dozens of transactions — and then sold the spectrum to Sprint (S) and Clearwire (CLWR) over the last few years for use in their 4G WiMax network.
Here’s the release:
Catalyst Investors Monetizes Remaining Assets of Oneida Communications
Exit achieves 38% IRR on 2006 investment
NEW YORK, June 23, 2009 – Growth private equity firm Catalyst Investors announced today that it has monetized the remaining assets of Oneida Communications Group through a transaction involving the sale of certain wireless licenses to Clearwire Corporation (NASDAQ: CLWR). Catalyst began acquiring wireless licenses through its ownership of Oneida in 2006 and sold the majority of Oneida’s spectrum holdings to Sprint Nextel in 2008. With this final transaction, Catalyst has delivered a 38 per cent annualized return on its investment.
Oneida was funded by management, Catalyst and Northwood Ventures to capitalise on the advent of “4G” broadband wireless technology by acquiring a footprint of wireless licenses in various markets in the United States. Harold Furchtgott-Roth, former FCC Commissioner and Catalyst Operating Partner, served as the Company’s co-founder and Chairman of the Board.
“We founded Oneida recognising the development of wireless broadband and its need for more spectrum,” said Christopher Shipman, partner with Catalyst Investors. “We are pleased to have made an investment in a quickly-consolidating industry and provide a 2X ROI for our limited partners in a very difficult market.”
“At the onset we believed we could become a significant holder of WiMax wireless spectrum,” said Bill Wilson, CEO and co-founder of Oneida. “With the financial support and management of the Catalyst and Northwood teams, we were able to acquire licenses covering more than 110 million MHz PoPs, making our goal a reality.”
The sale of Oneida’s assets is the first realisation in Catalyst Investors II, a 2006 vintage private equity fund.