– Established in 1997, UK2 has evolved into a leading international provider of domain name registration, shared, dedicated and Cloud hosting services to customers globally through multiple brands, delivered from data centres in the UK and the US
– UK2 has an industry-wide reputation for innovative hosting products. Through the VPS.NET brand, UK2 offers Cloud hosting to the mass market and today is the fourth largest true public Cloud provider in the world
– Lloyds TSB Development Capital (“LDC”), the investment arm of Lloyds Banking Group, is a leading private equity company in the UK mid-market
– Since 1981, LDC has completed over 400 investments and has ongoing interests in over 60 businesses across the UK
– In this transaction, LDC backed the management team led by Phil Male. Male was previously Chief Strategy Officer at Cable & Wireless Worldwide and Chief Operating Officer of Thus Group plc
– UK2 represents an attractive investment for a private equity investor. UK2 operates in the high growth hosting sector that, has seen, and is expected to see, continued consolidation of the leading platforms in Europe
– UK2 has significant potential to achieve enhanced margins as the business grows and benefit from new product innovations including a new public cloud offer
– UK2 also has the option of participating in the continued consolidation of the European webhosting sector
– Arma Partners was engaged by LDC to co-ordinate the acquisition process and provide full support including due diligence, financial modeling, valuation, financing and contract negotiations
– This transaction is the second hosting services transaction for Arma Partners and drew upon our experience with key value drivers for multi-brand and innovative hosting services players
– This is Arma Partners’ second transaction for LDC, following our work on the acquisition of Easynet from BSkyB and reinforces Arma Partners’ strong execution skills and tradition of repeat business with key clients