PE firm Cinven to buy internet domain, hosting firm Host Europe for $666 mn

Private equity firm Cinven yesterday agreed to buy UK-based Internet domain and hosting company Host Europe Group from Montagu Private Equity for £438 million ($666 million).

Montagu, which had acquired Host Europe in 2010 from Oakley Capital Private Equity for £222 million, had in February hired investment bankers at UBS to oversee a strategic review of Host Europe, including a sale.

Founded in 1997 through the merger between Host Europe and Webfusion, which owned, one of the most prominent domain name registration brands in the UK, Host Europe is the largest privately owned hosting company in Europe with over 1.5 million customers.

It provides domain registration, mass hosting, customised managed hosting, cloud hosting and has an emerging software-as-a-service offering.

With brands like 123-reg, Heart Internet, Host Europe, Webfusion, Domainmonster, RedCoruna, Domainbox and Brand Fortress, the company has a strong market presence in the UK, Germany, Austria, Switzerland and Spain.

Montagu does not reveal annual revenues at Host Europe, but analysts say that the company generates revenues equally between the UK and other European markets.

Host Europe has a track record of strong growth in revenues and EBITDA of 16 per cent and 23 per cent CAGR, respectively, for the past 4 years and is expected to continue to generate double digit growth in 2013.

Commenting on the 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.''

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.