Jason Galanis

Business

Galanis is a principal of Holmby Capital Group, a private equity and consulting firm where he is CEO. He has invested in financial technology, patents, trademarks and other intellectual property since 1988.

He is the principal and CEO of IP Global Investors Ltd. IP Global is an investment company that invests in intellectual property and financial technology businesses. The firm's portfolio investments include the largest beneficial owner of an asset management firm with $1.7 billion of assets under management (as of April 2014).

Small-business founder

Galanis co-founded a small business called The Credit Store, Inc., which grew to employ over 350 employees in California and South Dakota. The Credit Store was a consumer advocacy and credit card issuer. Galanis and his partner obtained institutional funding from Cargill and minority owned by Electronic Data Systems (now owned by HP).

Cargill Financial Services provided The Credit Store a $200 million credit facility. Galanis led the refinancing for The Credit Store of the $200 million Cargill credit facility with Morgans Waterfall Vintiadis & Co. Morgans Waterfall was a $2 billion hedge fund that Cargill introduced to The Credit Store.

The Credit Store was a technology- and information-based financial services company which provided credit card products to consumers who may otherwise have failed to qualify for a traditional unsecured bank credit card. The company focused on consumers who had previously defaulted on debt. It reached these consumers by acquiring their defaulted debt from the lender or subsequent debt owner. Through direct mail and telemarketing operations, these consumers were offered an opportunity to settle their debt, typically at a discount, transfer the agreed settlement amount to a newly issued unsecured MasterCard® or Visa® credit card, and establish a positive credit history on their newly issued card by making timely and consistent payments. The Credit Store accepted lump sum settlements and installment payment plans from those consumers who did not accept the credit card offer, and also resold defaulted debt in the secondary market to other debt buyers.

The origin of the business was Galanis' acquisition of delinquent loans from banks while in college. He developed a proprietary credit-scoring algorithm used to apply a credit ranking and “collectibility” index to non-performing debt. He filed for patents on the technology. To commercialize the patent-pending technology (patents filed by Galanis in 1994), he co-founded Triage Information Systems, a nationwide buyer of consumer debt, with which he closed 31 transactions representing over $2 billion in loans. Triage was an affiliate of The Credit Store.

Galanis and his partner exited The Credit Store in a $152 million transaction in which The Credit Store, together with the trademarks and the patent-pending financial algorithm Galanis invented, was sold to an investment group financed by GE Capital and chaired by the former president of HSBC USA. The transaction was advised by Wasserstein Perella.

After the sale of The Credit Store in October 1996, Galanis temporarily retired and moved to London, England.

Credit card issuer buy-out

Galanis had led the acquisition of 100% of another established credit card company called Service One International of Sioux Falls, South Dakota, in a leveraged buyout. Service One was a full service consumer credit provider that specialized exclusively in the issuance of VISA and MasterCard branded credit cards to consumers. Service One is regarded as the pioneers in credit card products to credit-impaired Americans and at one time was the largest issuer of credit cards in the United States to this demographic.

Online credit card billing technology company

Galanis arranged and financed the acquisition of a third credit card company called Internet Billing Company in 2004 (iBill).

In 2004, Galanis organized the leveraged buy-out of Internet Billing Company (iBill) from a NASDAQ listed company as a-carve-out of a division of a public company. iBill was the largest credit card processor in the United States of online transactions. iBill focused on processing transactions for online subscriptions and memberships, which consisted predominately access to adult themed content. iBill created and maintained the most extensive database in the nation on consumer transactions for adult content with over 29 million unique records.

iBill had been acquired by a public company in 2002 for $112 million in cash. The public company came under criticism for the ownership of a credit card processor that primarily served adult transactions and determined to dispose of the subsidiary. The Galanis lead group acquired the company in 2004 for $34 million.

The business plan included the combination of iBill and Penthouse where the iBill database and the iBill proprietary financial technology was to be combined with the Penthouse intellectual property and adult industry expertise. The combination of the iBill database and financial technology with the registered trademarks of Penthouse was intended to create a fully integrated ‘new media’ company on the Internet.

The iBill/Penthouse combination plan was part of the efforts of Penthouse to emerge from bankruptcy protection filed in 2003. The extended contentious Penthouse bankruptcy reorganization and litigation adversely affected iBill’s business.

The company was resold to an American Stock Exchange listed public company for $54 million a year after acquisition.

Trademark investments

Galanis is known for providing reorganization financing to Robert Guccione’s General Media, the owner of the PENTHOUSE trademarks and publisher of Penthouse Magazine. He provided financing prior to the bankruptcy reorganization and as part of the bankruptcy exit plan. The permanent financing was led by Post Advisory Group, a Principal Financial Group (NYSE: PFG) subsidiary that manages approximately $9 billion in various credit strategies. Galanis introduced Post Advisory to Penthouse and worked with Post tot structure the senior debt facility.

In 2002, Galanis identified an opportunity to acquire certain Internet licensing rights to registered trademarks owned by Penthouse, the company founded by Robert Guccione in 1965. Galanis and Guccione reached agreement to acquire the rights to the Penthouse brand for use on the Internet and Galanis agreed to finance Guccione’s magazine publishing business. Galanis paid Guccione an upfront fee of $1.0 million for the Internet rights.

In October 2002, a public company of which Galanis beneficially owned 73%, acquired 99.5% of General Media, the parent company of Penthouse. Galanis was the first outside equity shareholder of Penthouse since its founding in the 1960s, and he continued to invest in Penthouse through 2003, when Guccione ordered the company placed into voluntary bankruptcy protection.

Galanis then led the investment group that committed $68 million to the bankruptcy Plan of Reorganization to restructure General Media through chapter 11. Galanis and his financial partner from Mexico City led the refinancing group, which was participated by Post Advisory Group.

Penthouse Media Group, now known as FriendFinder Networks, is one of the largest social media companies in the world with 38,000 websites, more than 445 million registrants and more than 298 million members in more than 200 countries and $345 million in revenues in 2010. It was previously controlled by financier and technology entrepreneur, Marc Bell.

Real estate investments

Galanis also completed the 2004 acquisition of the 22,000-square-foot (2,000 m2) Guccione Mansion in New York City, one of the largest residences in Manhattan.

Guccione had been unsuccessfully seeking financing for the home for eight years. The property was in the process of being foreclosed on by his mortgage holders. Galanis created, negotiated and closed a financing structure that resulted the acquisition of the property for $26.5 million from the lenders. Galanis funded the equity and placed the new mortgage.

In March 2008, hedge fund manager Phil Falcone, founder of Harbinger Capital, acquired the Guccione Mansion for $49 million.

Technology investments

Galanis has made other investments in various technology companies, including Themeware. Themeware was a software application provider to small businesses. Themeware marketed heavily on television and sold ecommerce software and credit card processing services to small businesses. Themeware was chaired by Gil Amelio, the former CEO of National Semiconductor and CEO of Apple Computer.

Other financial services

In 2008, he led the IPO of ASSAC with the Ho family from Macau which raised $115 million in proceeds.

He was the lead advisor on the acquisition of approximately $760 million in assets from two hedge funds in 2010.

Galanis also structured and executed the acquisition of a portfolio of life insurance policies and loans on life insurance policies representing approximately $1.2 billion of in-force life insurance consisting of 180 policies issued by highly rated insurance carriers with 96% of the carriers in the portfolio rated A, A+, or A++. The portfolio was acquired from a Los Angeles-based hedge fund for $105 million.

He was CEO of the merchant banking subsidiary of a billion-dollar NYSE-listed insurance company until April 2011.