Fingerhut Direct Marketing Inc. closed new equity financing totaling $62.5 million, the multichannel marketer said March 31.
The financing was led by venture capital firms Bain Capital Ventures and Battery Ventures. It includes what the company described as a “significant equity investment” from Tom Petters, chairman/CEO of Petters Group Worldwide LLC.
Petters Group consists of multiple operating companies involved in buying, selling and financing of consumer merchandise. Ted Deikel and Petters bought Fingerhut from Federated Department Stores.
Along with the equity investment, the company also received a $100 million permanent accounts receivable facility from Citigroup.
Fingerhut will use the new financing to invest in operational and marketing initiatives to accelerate growth, the company said in a statement.
Also announced by Fingerhut was that Brian Smith, president of Fingerhut, has been named president/CEO. Michael Krupka, managing director of Bain Capital Ventures, and Ollie Curme, general partner at Battery Ventures, will join the company's board of directors.
Deikel relinquished the title of CEO, but remains board chairman.
“Brian's been actively running the company, and he got the official title,” said Mary Pernula, spokeswoman for Fingerhut Direct, Minnetonka, MN.
The financing facility from Citigroup provides warehouse financing for Fingerhut consumer accounts receivables and a platform for future access to capital markets funding.
She said the roughly $63 million of equity financing was “about a year” in the works.
“It will be used for ongoing operations,” she said. “It secures the future for the company. They have money [that's] used to buy inventory and secure customer credit, and all of the things that capital goes to.”
Pernula said she couldn't “get into specifics” when asked how significant a contribution to the venture capital package was made by Petters.
As for the Citigroup contribution, that had been sought for “at least several months,” she added.
Pernula provided no specifics when asked about the company's growth projections.
“We really don't know,” she said. “Eighteen months ago [we had] zero jobs and zero revenue.”
The company has grown to where sales of $140 million were recorded last year with more than 400 employees.
“Brian Smith said it will grow very rapidly,” Pernula said when asked about growth in the number of workers. “There is definitely a growth plan in place and … [prospecting and circulation] will certainly increase.”
