Private Equity investors have been at the forefront of the consolidation trend within the industry across Europe.
In recent years a number of PE groups have built up significant buy-and-build operations. Among the most active has been the Host Europe Group (see right) which has been subject to a number of buyouts.
Another prominent PE player is HgCapital which over the past year has acquired Zitcom and ScanNet in Denmark. The Danish hosting market is particularly fast-growing, benefiting from very high broadband penetration and a thriving e-commerce market.
Market-watchers expect continued M&A activity among PE groups this year as the market continues to thrive.
The Danish market has also been driven by the strong revenue performance of both shared hosting and managed hosting players such as One.com and IT Relation, whilst the landscape remains highly fragmented as even smaller players are very profitable. PE groups are very interested in high growing hosting companies, evident by the recent acquisition of IT Relation by Adelis Equity, and One.com by Accel-KKR and the Danish Pension Fund ATP.
In France, the Ardian group acquired a 20% stake in Ikoula, a specialist in web and cloud hosting, while Isatis Capital and NextStage invested in French hosting company Ecritel in order to develop its business further in the US.
Another deal saw Carlyle Group acquire Spanish firm Telvent Global Services (TGS) which provides IT infrastructure management services, including the provision of hosting across five data centres in Iberia. The company also offers advanced hybrid cloud platform capabilities in addition to broader solutions for industrial cyber security.
Carlyle has previously partnered with a number of similar technology companies including Telecable, Equinix, Numericable, Coresite, Expereo and Completel.
The UK has continued to be a hotbed of activity. Pulsant, a provider of managed, hosted data centre and IT infrastructure services to the mid-market, was acquired by Oak Hill Capital from another PE firm Bridgepoint Development Capital (BDC).
Pulsant was formed in 2010 when BDC acquired Lumison, a provider of connectivity, hosting and managed IT services, and was part of the first step in a strategy to create a ‘one stop shop’ managed and hosted IT services supplier in the UK mid-market. Pulsant went on to acquire Blue Square Data, Dedipower and Scolocate, and very recently acquired Onyx, an IT infrastructure services provider.
Oak Hill has a record of investing in the data centre services market. Its current IT services investments include ViaWest, Inc., a provider of colocation and hybrid cloud services, and Intermedia.net, Inc., a provider of cloud-based, hosted services.
Market-watchers expect strong M&A activity among PE groups this year as the market continues to thrive. The UK sector is seen as a particularly hot market as, behind the US, it has one of the most advanced hosting industries in the world.
For instance, players such as The Six Degrees Technology Group, backed by Charlesbank Capital Partners, is continuing its fervent acquisition drive, having recently bought cloud service provider Carrenza. Other UK PE-backed companies tipped to be sold in the near future include Node4 (LDC), Attenda (Darwin) and Adapt (Lyceum Capital).
Strategic purchasers have also been attracted to the strong expansion potential in the hosting market and buyers are emerging from a variety of backgrounds.
IT solutions providers have been developing their web hosting businesses and looking for acquisition opportunities in order to achieve economies of scale, diversify their offerings and support their international expansion.
Telecoms players are also developing their web hosting services through acquisitions, and actively participating in the wider consolidation drive throughout the hosting industry. For instance, Orange recently acquired Cloudwatt, a move which strengthens its enterprise cloud services offering.
IT solutions providers have been developing their web hosting businesses and looking for acquisition opportunities...
In France OVH has become one of Europe’s largest web hosting companies following huge investment in its data centre and network infrastructure. It plans to invest a further ¤400m over the next few years in order to compete with US rivals.
In the UK cloud computing company Iomart acquired United Communications, which trades as United Hosting. Previous acquisitions have included SystemsUp, ServerSpace and Backup Technology.
Last year United Internet subsidiary 1&1 Internet acquired home.pl S.A, a leading player in the Polish webhosting market. 1&1 has been operating in Poland since 2010 and its aim is to gain further ground in the Polish market which has grown significantly in recent years. The deal follows United Internet’s earlier acquisition of German firm Versatel.