International private equity firm Cinven today announces that it has agreed to sell Host Europe Group ('HEG' or 'the Group'), the largest privately-owned web services provider in Europe, to GoDaddy Inc. (NYSE: GDDY), the world's largest cloud platform dedicated to small, independent ventures.
Cinven acquired the core business within HEG in August 2013 for an original consideration of £438 million. The transaction marked the first platform acquisition of an overall consolidation strategy, originated by Cinven's TMT team who had identified web services as an attractive and fragmented market. HEG was well positioned within the segment given its brand name, technical infrastructure and management.
The Cinven team worked closely with the HEG management team and key achievements include:
- Implementing a successful buy and build strategy including four significant acquisitions - Telefonica Online Services, Domainfactory, Intergenia and Paragon - and a number of additional smaller acquisitions including eight in the first half of 2016;
- Successfully consolidating the HEG businesses to six primary brand from more than 20 deals completed since the company was founded;
- Strengthening and investing in HEG's management team including the promotion of Patrick Pulvermüller from COO to CEO and the appointment of new divisional CEOs for both Mass Hosting and Managed Hosting;
- Improving HEG's organisational structure to function as an integrated group with clear focus on its two core business divisions;
- Introducing new products in existing business units and rolling out existing products across the Group; and
- Optimising the capital structure of the business.
This transaction represents the third successful realisation of a Cinven portfolio company within the last two months following Cinven's agreements to sell Italian-headquartered Avio Spazio, the leading international operator in space launchers and space propulsion, and German-based lighting business, SLV.
David Barker, Partner at Cinven, said: "Our investment in HEG has been a great success, taking a platform asset and growing it both organically and by acquisition in the highly fragmented market for web services in Europe. We have only been able to do so with a talented management team at HEG, and we wish them continued success under GoDaddy's ownership.
"Cinven has a strong track record in buy and build investment strategies and HEG is a good example of this. Our successful realisation of HEG also reinforces our TMT track record. We have made 16 investments, with the three most recent, Numericable, Ziggo and HEG, generating more than €4.65 billion of realised value in aggregate."
Thomas Railhac, Senior Principal at Cinven, added: "Over the last three years, together with HEG's management, Cinven has completed the acquisition of four significant businesses and several smaller add-ons, successfully developing the brand and expanding the business. The Cinven Portfolio team has also been instrumental in several value-enhancing initiatives including acquisition integration and marketing effectiveness. HEG is a great business and we have been proud to work with the team."
Patrick Pulvermüller, Group CEO of HEG, commented: "It has been a pleasure working with Cinven - across its Investment, Portfolio and Capital Markets teams. They have helped reshape our organisation for significant growth and worked closely with our management team on evaluating add-on acquisition targets as part of our buy and build strategy.
"In combining with GoDaddy, we see a remarkable opportunity for our customers, partners and the small business ecosystem in Europe. Together GoDaddy and HEG will generate even more value for our customers and introduce new solutions that help their ventures succeed."
The completion of the sale of HEG is subject to customary regulatory approval.
Advisors to Cinven on this transaction included: Deutsche Bank (financial), Freshfields (legal), OC&C (commercial), Deloitte (accounting), EY (tax).