IT managed service provider Selection Services, based in Kent, supplies IT products to the small and medium-sized enterprise (SME) market.

The deal is being led by the current managing director Grahame Harrington, and financial director Harvey Downer. The two men have been the operational management team in the business for ten years.

The deal also sees hosting and disaster recovery business Cloud Data incorporated into Selection Services, a move which takes the combined offering to 360 staff and revenues of £28 million.

Harrington comments: ‘It enables us to build upon our established service portfolio, increasing our capabilities and consequently our client options.’

The transaction marks the ninth investment made from the £100 million maiden fund that Palatine closed in December 2007.

Prior to January 2011, Palatine Private Equity was known as Zeus Private Equity and was formed in 2005 by Gary Tipper, Ed Fazakerley and Tony Dickin.

The firm says its strategy is to invest in UK companies with enterprise values of up to £50 million. It currently has interests in Hallmark Hotels and financial education business Wealth at Work.

Dickin adds: ‘We believe the combination of Selection and Cloud Data creates a strong platform from which to build a significant IT services business to take advantage of the trends in the sector.’

As part of the deal the management team of Selection Services will be joined by Cloud Data’s Anthony Galley, as the new chairman, and Glenn Carroll as business development director.

Galley says the coming together of Selection and Cloud Data is at a ‘pivotal time’ for the IT sector, as it moves towards increased outsourcing and cloud services.

He adds: ‘I am very excited about the opportunity the combined group presents. We are looking to exploit this through both organic and acquisitive growth and expect to be making the first acquisition in the next few months.’