Providence Equity Partners, a private equity firm, today announced that is has agreed to acquire Node4, a UK data center provider, from mid-market private equity firms Bowmark Capital and LDC (Louis Dreyfus Company). Specifically, Node4 is a managed services provider (MSP) of hybrid managed cloud and integrated IT solutions. Dgtl Infra estimates that Providence Equity Partners acquired Node4 for £250m+ ($350m+ U.S. dollars) from Bowmark Capital and LDC.
Node4 – Overview
Node4 owns three data centers in the UK, located in the markets of Derby, Leeds, and Northampton. Specifically, key operational metrics for each of these data centers are below:
- Derby: comprises 330 server racks, with 2.5 MVA of power capacity, across 16.0k sqft of space
- Leeds: comprises 450 server racks, with 3.0 MVA of power capacity, across 26.0k sqft of space
- Northampton: comprises 800 server racks, with 4.0 MVA of power capacity, across 41.0k sqft of space
Over the past five years, Node4 has increased its sales from £28m to £56m, while also doubling its profits. Indeed, the company has achieved this organic growth through new customer wins and offering a broader range of solutions to its existing clients.
Node4 has made three acquisitions which have enhanced the company’s technical capabilities and provided access to new vertical markets. Notably, Bowmark Capital secured and invested an additional £40m in follow-on debt and equity capital to fuel the company’s acquisition strategy.
Starcom Technologies – Node4 Acquisition
In February 2021, Node4 acquired Starcom Technologies, the managed services division of K3 Business Technologies Group for £14.7m. Indeed, the acquisition of K3 adds £11m of revenue to Node4 and positions the company to deliver cloud managed services throughout the UK. Furthermore, the acquisition of K3 expands Node4’s operational presence in Scotland, the North West and South East England.
Competition
Node4’s key competitors are typically regional data center operators and companies that focus on managed services. Specifically, Node4’s competition includes operators iomart, Pulsant, Rackspace, Redcentric, and UKFast.
Transaction Advisors – Providence Equity and Node4
Node4 was advised by Arma Partners, alongside Pinsent Masons (Legal), PwC (Vendor Tax and Financial), Deloitte (Tax Due Diligence and Structuring), and Liberty Partners (Management).
Additionally, Providence Equity Partners was advised by DC Advisory and Raymond James, alongside Weil Gotshal & Manges (Legal), FTI Consulting (Financial), KPMG (Tax and Structuring) and CMA Strategy Consulting (Commercial).
Node4 – Prior Investors – Bowmark Capital and LDC
Bowmark Capital acquired Node4 in October 2016 for £145m ($185m U.S. dollars). At the time, Node4 generated ~£10m of EBITDA, implying a multiple of 14.0x EBITDA for the business. As part of this transaction, LDC rolled a portion of its investment, for a minority shareholding alongside Bowmark Capital. Indeed, LDC first invested in Node4 in 2013.
For further comparable transactions, check out our comprehensive list of data center precedent M&A transactions here.
