Former SpiriTel CEO Alastair Mills is back on the acquisition trail after raising a massive war chest of £60m to fund the purchase of three companies which will form the basis of a new managed data services group.
The three new acquisitions are datacentre UKSolutions, MPLS provider NetworkFlow and voice services company Protel, resulting in 60 staff across four offices and 900 customers.
The group, which has yet to be branded, expects to add a mobile reseller to its stable by the autumn. The management team is currently in talks with two mobile resellers.
Penta Capital led the fundraising exercise for the new group. The £60m raised is one of the largest single investments in the sector in recent times.
Mills has retained his core team from SpiriTel, including CFO Ronnie Smith, commercial director Jonny Shanmuganathan and company secretary Andrew Booth.
The group said another ‘significant senior hire’ is expected to be confirmed next week.
The fund raising for this new venture reflects the markets’ confidence in Mills and the former SpiriTel management team, which oversaw SpiriTel’s return to profitability and rapid growth via a dynamic buy and build strategy.
Between 2007 and 2010, SpiriTel made 12 acquisitions delivering over £35m in revenue and organic growth of 20% in a declining market.
When SpiriTel was sold to Daisy for £37million in November 2010, Penta Capital realised a near 200% return on their 2009 investment.
The three initial acquisitions form the basis of the new Group which will expand through a clear strategy of providing three key managed data services elements: core, connectivity and overlay services.
UKSolutions provides core enablement. It has 15,000 square feet of data centres spread over two sites, which deliver solutions including the provision of dedicated managed hosting environments, hybrid cloud infrastructures and full private cloud architectures.
NetworkFlow provides access and WAN connectivity. It has its own next generation network which allows high-bandwidth connectivity solutions for enterprises. It designs bespoke networks via more than 20 interconnects with major UK providers.
Protel provides overlay converged services that leverage the underlying core infrastructure and access technologies. Its services include global inbound and outbound voice delivery, voice business continuity solutions, fixed mobile convergence solutions and SIP trunk migration services, all managed via its bespoke customer portal.
To complete its converged communications portfolio, the group says it expects to acquire mobile voice and data capability in the near future.
The new group points to the performance of the UK managed hosting market as evidence of its potential growth. The UK market for managed hosting grew at a historical four-year CAGR of 18% to 2010 with European market growth xpected to accelerate to 23% CAGR to 2013.
The group said that by the end of 2011, cloud computing services are expected to generate 15% of worldwide technology spend with anticipated annual growth of 26% to 2015, representing five times the growth rate of the tech industry as a whole (IDC).
Mills said: ‘SpiriTel was one of the fastest growing voice companies in the UK before its acquisition last year. This was testament to a hugely talented and driven management team that delivered over 20% organic growth, through a recession, in a declining market. I am delighted to be working with the team again following our recent successful fundraise.
'The trends identified by both analysts and end-user clients are the same: managed data services will continue to grow rapidly, driven by the desire for cloud connectivity and virtualisation. At SpiriTel we faced a challenge familiar in the market: we were a voice company trying to turn into a data company. This time, our group is very firmly focused on growing from a strong data services core: we’re starting with 15,000 square feet of data centre space, a next generation network and a full suite of IP voice services. We are firmly positioned to capitalise on an exciting growth market.’