Penta Capital commits £60 million to telecoms venture

Mid-market private equity house Penta Capital has committed £60 million to a new company that has been created to acquire UK managed data service providers.

In what will be a shake-up for the fragmented UK telecoms industry, former SpiriTel chief executive Alastair Mills will lead the yet-to-be named business that aims to implement a buy-and-build strategy.

The announcement follows the acquisitions of three established high-performing businesses in the sector, which form the initial platform upon which the investment will be significantly grown over the next two years.

Penta and its investment partners, including Toscafund, will support Mills and his management team who successfully executed the buy-and-build strategy of SpiriTel before the business was sold to the Daisy Group last year for £37 million.

The investment represents one of the largest single investments in the managed data services sector in recent times with the strategic objective of building a ‘market-leading core-to-edge service provider’. The new group will target the SME and corporate markets for hosting and cloud connectivity products.

The initial three acquisitions are of leading datacentre operator UKSolutions, MPLS provider NetworkFlow and voice services company Protel, giving the new group initial operations with 70 staff across four offices.

UKSolutions has 15,000 square feet of datacentres and delivers services that include the provision of dedicated managed hosting environments, hybrid cloud infrastructures and full private cloud architectures from their two datacentres.

NetworkFlow provides access and WAN connectivity, while Protel offers overlay converged services that leverage the underlying core infrastructure and access technologies.

The UK managed hosting market grew at a historical four year compound annual growth rate of 18 per cent to 2010 and European market growth is expected to accelerate to 23 per cent by 2013, a statement from the firm said.

Steven Scott of Penta Capital comments, ‘We are delighted to be back in business with the former team at SpiriTel. We enjoyed working together and proved the buy-and-build potential in the fragmented telecoms sector.’

Mills adds, ‘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 focussed on growing from a strong data services core: we’re starting with 15,000 square feet of datacentre space, a next generation network and a full suite of IP voice services.’ 

Todd Cardy

Todd Cardy

Todd was Editor of between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital.

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