Private equity firm, Cinven, has acquired Host Europe Group from Montagu Private Equity for a total consideration of £438m. The company was originally bought by Montagu in 2010 for £222m.
When Montagu acquired Host Europe in 2010, the hosting firm had revenues of £60m - split equally between the UK and Germany - and EBITDA of £22m. In the past four years, Host Europe has registered a CAGR (compound annual growth rate) of 16% in revenues and 23% in EBITDA. Furthermore, that double-digit rate of revenue growth is set to continue in the current financial year.
Host Europe provides a range of hosting services to SMEs covering domain registration, application hosting, cloud hosting and managed hosting services. Operating under the Host Europe Group are eight brands, including domain registration company, 123-reg. The Group’s ‘heartland’ is within those domain registration services – but a wealth of opportunities would be open to it by targeting that large existing customer base with these additional cloud and managed hosting services. The mid-sized cloud and managed hosting market is a ‘hotbed’ of activity right now – in particular amongst the rapidly growing internet-based firms who need more reliable and more flexible infrastructure services.
Cinven was advised by Oakley Capital Corporate Finance, which has had much involvement in the UK hosting scene, working with NetBenefit (see NetBenefit sold to Peer 1), Adapt, Six Degrees, Daisy, Claranet Group (see Claranet acquires Star in £55m deal) among others in the past.