European private equity firm, Cinven, today announces that it has reached agreement for its fifth Fund to acquire Host Europe Group ("Host Europe" or the "Company") from Montagu Private Equity for a total consideration of £438m.
Headquartered in the UK, Host Europe is a leading European provider of hosting and domain services to small and medium enterprises ("SMEs"), with c. 600 employees. It offers an end-to-end product suite including domain registration, application hosting, cloud hosting and managed hosting targeting SMEs, with most of its revenues generated in the UK and Germany.
Host Europe has a track record of strong growth in revenues and EBITDA of 16% and 23% CAGR, respectively, for the past 4 years and is expected to continue to generate double digit growth in 2013.
Cinven's TMT team identified Host Europe as an attractive investment:
- The hosting industry is growing rapidly, driven by structural trends in cloud computing and increased web-presence amongst SMEs;
- The business has established market leading positions in its core markets leveraging a large base of 1.5 million customers, well-recognized brands (123-reg, Webfusion, Heart Internet and Host Europe) and best-in class technology platforms;
- The Company has an attractive financial profile including strong organic growth and high earnings visibility due to its subscription model;
- The European hosting market remains highly fragmented and offers significant consolidation opportunities; and
- The management team led by Thomas Vollrath is highly experienced and has a proven track record of driving growth.
Commenting on this transaction, David Barker, a Partner at Cinven, said:
"Host Europe operates an attractive business model enjoying double digit growth rates and very high levels of earnings visibility. Its market position has been secured through investment in its infrastructure, marketing and the leadership team, and these features, in combination with strong structural growth in its markets, make Host Europe a compelling investment opportunity.
Cinven is excited to be backing an excellent management team with a proven track record of creating value. We will be supporting them in their strategic plans to drive further growth both organically and through the consolidation of what is a fragmented market in Europe."
Thomas Vollrath, Chief Executive Officer of Host Europe Group, said:
"We have more than 15 years' experience in the web hosting industry, and the Host Europe group is renowned for providing high quality hosting products with comprehensive technical support to our many customers in Europe. We are pleased with the growth we have achieved and confident that we can continue to improve in years to come. We look forward to our new partnership with Cinven."
Oakley Capital Corporate Finance and Morgan Stanley & Co. International plc were financial advisors to Cinven on this transaction. The transaction is subject to regulatory approvals.