Week of August 7, 2000
  Blockbuster Deal of the Week
   from Site Selection's exclusive New Plant database

IG2's 500-Employee Mid-Atlantic Center
Headed for Richmond

Wiring the world to the Net: That mad rush, which is spurring such a surge of location activity, has struck again - this time in Richmond, Va. Last week, IG2 (www.ig2.com) announced that it is investing US$30 million in a new regional operations center, creating as many as 500 new jobs.

Company officials say the new operation is a key site for IG2, a subsidiary of Queens, N.Y.-based Fidelity Holdings (www.fdhg.com). IG2 is developing bundled Internet, telephone, and television services for residential customers.

The center in Henrico County will operate 24/7/365 in serving existing ISP customers, IG2 officials say. In addition, the new facility will serve what company executives call "beta-test customers" for new IG2 products. Other space in the center will be used for co-location space for other telecom operators and business IP-based application services.

IG2 May Be Sold or Spun Off, Fidelity Officials Announce

The Virginia area that IG2 picked has a long lineage (at least what passes for long in the U.S.). The second settlement in colonial Virginia, Henrico County was established in 1634 and named for Henry, Prince of Wales, the eldest son of King James I of England.

For IG2, though, the Virginia deal comes as the company's own history faces a significant departure. In some ways, IG2's future is like one of the castaways on "Survivor."

Only a few days before the Richmond facility went public, Fidelity Holdings on July 31 announced that it was considering what corporate officials called "appropriate actions to maximize shareholder value, which may include selecting a strategic partner/investor or sale or spin-off of IG2."

But unlike the motley crew on TV's "Survivor," IG2 apparently won't face expulsion. Instead, Fidelity Holdings' July 31 announcement indicated that the company will likely retain an IG2 connection. A different strategy is necessary, officials explained, because IG2 falls outside Fidelity's core competencies.

"Fidelity's new management team is focused on enhancing shareholder value," said Bruce Bendell, Fidelity Holdings' chairman and CEO of president of its Major Automotive Group. ". . . While we are convinced that IG2's technology offers an excellent growth opportunity, we believe it can reach its goals and objectives faster, and attain a valuation in line with its growth potential, if it were an independent entity.

"Although we would retain an ownership interest in IG2 and thereby participate in its success," Bendell continued, "Fidelity management would be able to concentrate on its core business in successfully acquiring and operating automotive dealerships and leave the growth of IG2 in the hands of our experienced managers." Those managers, Bendell added, "can better focus and communicate with industry analysts."

The fluidity of IG2's status may have been what prompted officials to lease the Richmond facility, which will span more than 100,000 sq. ft. (9,000 sq. m.).

Incentives Total $2.8 Million over Five Years

The IG2 deal marks another success for the high-tech cluster that Virginia has amassed in recent years.

"We are pleased to select Virginia as a major technical center from where all Mid-Atlantic operations will be driven," commented Dennis Roth, chairman and CEO of Fidelity Holdings' technology division, as the project was announced. "The growing technical infrastructure, the available academic community and skilled work force, and supportive governmental policies make Henrico County an attractive choice,"

Virginia provided incentives to land IG2, but they certainly don't seem extravagant.

Gov. Jim Gilmore approved a $500,000 matching grant from the Governor's Opportunity Fund. The award was facilitated by The Virginia Economic Development Partnership (yesvirginia.org), the Greater Richmond Partnership (www.grpva.com) and Henrico County, state officials explained. That grant supplements a $500,000 endowment for site preparation from Henrico County.

Other location benefits include tax incentives, other infrastructure improvements, and training services from the Virginia Dept. of Business Assistance (www.dba.state.va.us). The total incentive package totals an estimated at $2.8 million over five years, according to the Greater Richmond Partnership.

"Henrico County and Virginia will reap the rewards of Fidelity Holdings and its reputation as a 'leading edge' in developing bundled communication services," said Virginia Secretary of Commerce and Trade Barry E. DuVal. "We are honored to have Fidelity as one of our newest technology citizens."

©2000 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.