Content Delivery Network Highwinds Raises $205 Million In Debt From Cerberus, Goldman Sachs, And General Catalyst

Content delivery network Highwinds is looking to make a massive investment in growing its business, and it has raised $205 million in debt financing to do so. The financing comes from Cerberus Business Finance and Goldman Sachs BDC, and includes follow-on investment from equity investor General Catalyst.

Highwinds is what you might consider an old school CDN: The company has been around since 2002 and specializes in traditional, commodity large and small file delivery. While most of its competitors have moved to offering higher margin services like dynamic site acceleration and advanced security services, Highwinds has continued to focus on providing very low-cost delivery of file downloads and video streams.

It’s not sexy, but it works. And it has Highwinds generating enough free cash flow to be able to raise debt financing, according to CEO Steve Miller. The decision to raise debt, rather than equity financing, was made primarily so that he and others at the company could maintain control and keep as much of the company as possible.

“When you think about the most expensive type of capital to raise, it’s equity,” Miller told me. “We didn’t want to end up like some of our competitors, who are having to raise equity financing so they could keep growing. We want to hold onto as much equity as we can.”

Along with the financing, the company has completed a recapitalization that was aimed at redeeming some earlier equity investors. That primarily meant buying a equity stake from Alta Communications, which was looking to wind down the fund that Highwinds had been a part of. General Catalyst, also an equity investor, has maintained a stake in the company.

With the latest financing, Highwinds has raised a total of about $420 million in debt and equity financing since being founded. The funding ends up being the largest single amount raised by a content delivery network since Limelight Networks went public in 2007.

So what’s Highwinds plan to do with all the cash? According to Miller, the company will be using the working capital to re-invest in its global content delivery network while also looking at some M&A opportunities.

It’s hoping to expand the capacity of the network. And while it’s focused primarily on commodity large- and small-file delivery for companies in the gaming, advertising, and media space, it could look to add more features — like say, dynamic site acceleration.

On the acquisitions side, Miller says the company will be looking to opportunities that would be complementary to its HTTP delivery business. That could help Highwinds move up the proverbial stack to provide higher-value services to its existing clients, while also helping to attract new ones.