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The interesting connection between the .Org deal and ICANN

by — Policy & Law 43 Comments

Former ICANN CEO Fadi Chehadé appears to have a connection to the latest big deal in the domain name industry.

Graphic showing connections, with three lines connecting to four dots

Former CEO of ICANN appears to have a connection to the firm that just bought the .Org registry.

This morning, Internet Society announced it is selling Public Interest Registry, the non-profit that runs the .org domain name, to Ethos Capital.

Ethos Capital isn’t exactly a household name. In fact, it appears to have been set up in recent months. It just acquired its domain name EthosCapital.com at the end of last month.

The founder of Ethos Capital is Erik Brooks. He left ABRY Partners this year after spending two decades at the investment firm.

Does the name Abry ring a bell? That’s because it’s the company that bought new top level domain name company Donuts last year.

That deal involved Abry Senior Advisor Fadi Chehadé. Chehadé is the former CEO of ICANN, the group that oversees the domain name industry.

Now we have a twenty year veteran of Abry, who worked on the Donuts deal and was (or still is) a member of Donuts’ board, leaving this year to form a new entity that buys a registry, much like how Abry bought Donuts.

And the CEO of Public Interest Registry is Jon Nevett, one of the founders of Donuts.

Things get even connected.

On May 7 this year, Fadi Chehadé appears to have registered EthosCapital.org. He is listed as the owner in Whois. That was just before a Delaware company by the name Ethos Capital, LLC was formed.

I wonder why Abry didn’t invest in PIR? Was Ethos set up as a special entity to invest in PIR, and why? What is Chehadé’s connection?

The other person listed on Ethos Capital’s website is Nora Abusitta- Ouri. She worked for Chehadi at ICANN as SVP, Development and Public Responsibility Programs.

I’ve reached out to Ethos Capital, Chehadé, and Abry Partners about this and will update this story if I hear back.

Year in Review: MMX acquires .XXX

by — Uncategorized 1 Comment

Adult top level domain company was one of many acquisitions in the domain business during 2018.

domain name company acquisitions with stock board

MMX, also know as Minds + Machines, is a new top level domain name company with a portfolio of strings such as .beer, .miami and .VIP. It’s publicly traded on the London AIM market (MMX), so it faces the daily pressure of being a public company in a business that is still seeking its footing.

It underwent a strategic review over the past year to see if it should sell itself of bulk up. It chose the later.

In May, MMX announced that it was acquiring ICM Registry for $10.0 million in cash and 225 million shares, which were valued at $31.0 million at the time of the announcement.

ICM registry isn’t your run-of-the-mill top level domain registry. Its domains are adult-themed including .xxx, .sex, .adult and .porn.

While the domains are controversial, the move will shore up MMX’s earnings and add stability to its income statement. This gives the company breathing room.

ICM started its life with a hard-fought battle to get .XXX. The domain was a sponsored top level domain introduced in 2011. The timing was good because it didn’t face competition from new TLDs.

There were three other notable acquisitions during the year.

CentralNic, another domain company traded on the London AIM (CNIC), bought KeyDrive for $55 million.

Private equity group Abry Partners bought new TLD company Donuts in a heated bidding war.

And Neustar bought out Verisign’s (NASDAQ: VRSN) security business that includes things like DDoS protection. The deal will be for somewhere between $50 million and $120 million depending on customer migrations.

Akram Atallah to lead top level domain company Donuts

by — Uncategorized 1 Comment

Atallah moves from senior ICANN role to contracted party Donuts.

New top level domain name company Donuts has named Akram Atallah as its new CEO. The news was first reported on DomainIncite yesterday.

Atallah was President of ICANN’s Global Domains Division where he oversaw much of the new top level domain name program. It was Atallah who urged his former colleague Fadi Chehade to join ICANN as CEO. Chehade later left ICANN and joined Abry Partners, which acquired Donuts last month. Now Chehade had a chance to hire Atallah.

This will be the third CEO of Donuts in the past two years. Founder Paul Stahura stepped down at the beginning of 2017 and was replaced by Bruce Jaffe. Jaffe has a deal-making background. He helped Donuts acquire Rightside and a few other small businesses and facilitated the sale to Abry Partners.

It strikes me that Stahura, Jaffe and Atallah all have very different backgrounds and personalities. This latest change might be a bit jarring for Donuts staff. It will be interesting to see what changes the company makes under private equity ownership with Atallah at the helm.

There might also be a bit of controversy with this hiring given Atallah’s former role overseeing new TLDs at ICANN. There was a lot of pushback when MMX (then Top Level Domain Holdings) hired Peter Dengate-Thrush in 2011. Dengate-Thrush was the former Chairman of ICANN’s board. That hiring was particularly striking because Dengate-Thrush has just pushed through approval of the new TLD program and the application process was just beginning. I’m not sure it will be as big of an issue with Atallah given where the program is in 2018.

Atallah will join Donuts on November 12. That’s after this months ICANN meeting in Barcelona.

Breaking: Domain name company Donuts Inc. acquired by private equity firm Abry Partners

by — Services 6 Comments

PE snaps up company that manages nearly 240 top level domain names.

Abry Partners, a private equity firm that has completed $77 billion in transactions since it was founded in 1989, is acquiring new top level domain name company Donuts, Inc. Terms of the deal and the expected closing date were not disclosed.

Donuts operates top level domain names such as .guru, .software and .life. It is the largest new top level domain name operator in terms of the number of TLDs managed with about 240 TLDs. About 4 million second-level domains using Donuts’ top level domains are registered.

The company also owns retail domain name registrar Name.com.

Donuts has raised more than $150 million from investors since it was founded in 2010 by domain industry veterans Paul Stahura, Jonathon Nevett, Richard Tindal, and Daniel Schindler. Paul Stahura was CEO until the beginning of 2017, when he became executive chairman and Bruce Jaffe took over as CEO. Since then Tindal and Schindler have left the company.

The company was one of the savviest applicants for new top level domain names. It understood early on that contention sets would likely be settled in private auctions, helping it refill its coffers by losing auctions for the new domains. Its scale has enabled it to operate profitably despite only modest demand for new TLD registrations.

The acquisition of the majority of shares in the company does not include an additional cash infusion into the company. The deal will allow some of the early investors to exit an investment they made eight years ago.

It’s not surprising that a private equity company would be interested in a business like Donuts. Donuts is essentially a subscription business with a very predictable annual renewal rate and cash flow.

Abry Partners makes communications, media, information and business services investments. Former ICANN CEO Fadi Chehadé is a partner.

This story has been edited to add additional information about Abry Partners.