Hony leads $50m round for US mobile commerce specialist

The investment follows a recent recapitalization financing led by Point Guard Ventures and a number of mutual funds. The new capital will be used to accelerate network growth, expand globally and make acquisitions.

Deem is a commerce-as-a-service provider that claims to help companies lower costs, increase revenue and enhance customer loyalty. Savings come through a suite of apps that track travel, expense and purchasing costs. Clients include Siemens, MetLife, Coca-Cola, GlaxoSmithKline and Goldman Sachs.

Deem also claims to have a network of more than 17,000 buying organizations, hundreds of thousands of selling merchants and scores of distribution partners across consumer, mobile, travel and business services. Through this network, companies can identify and engage with new customers, offering a variety of promotions to encourage loyalty. Finally, clients can syndicate products and services from Deem and make them available to existing customers.

John Zhao, CEO of Hony, said in a statement that he believes Deem has the potential to become one of the world's most important commerce and software-as-a-service companies.

"Over the past two years as it exited the financial services vertical and focused on its core business, Deem has slashed operating expenses, introduced market-leading products, grown revenue and positioned itself for global domination," Zhao added. "There is simply no other company better positioned to become the most trusted and valuable commerce partner to businesses, globally and locally."

Founded by Patrick Grady, the current chairman and CEO, in 2000, Deem has now raised $516.9 million across 11 funding rounds since 2004, according to CrunchBase. Notably, American Express, Foundation Capital, Chase Capital Partners and Oak Investment Partners put in $100 million in 2008 and then American Express and J.P. Morgan invested $133 million three years later.

These substantial rounds of funding came on the back of Deem's decision in 2008 to enter into partnerships with a number of banks and credit card companies to help them deepen customer engagement and monetization, and thereby offset declining interchange fees. However, the move resulted in huge custom software development projects and unsustainably high operating expenses.

The recapitalization financing announced earlier this month was the culmination of a comprehensive restructuring process whereby Deem decoupled from its bank partners and refocused on its core business.

This is Hony's second outbound deal in a month, following the acquisition of restaurant chain Pizza Express from UK-based private equity firm Cinven Partners for GBP900 million ($1.54 billion). Earlier this year, the Chinese PE firm also participated in an investment in a start-up Hollywood film studio.

 

 

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• Topics
• Expansion
• Technology
• North America
• Greater China
• Hony Capital
• USA
• Technology
• Growth capital