Brit bit barn and hosting slinger C4L Group sold for £23m

Castle Street Investments goes from online dating biz to tech services

LSE-listed Castle Street Investments has slurped network services and bit barn hosting biz C4L Group Holdings for circa £23m.

Under the terms of the sale, the investment vehicle - born out of its online dating firm Cupid - will pay £20.2m for C4L’s equity (£14.2m in cash, the rest in shares), and assume £2.8m of debt.

C4L owns and runs coreTx which includes a 100Gbps MPLS network built on Juniper, fibre connectivity in more than 50 server farms, a 3MW data centre in Bournemouth and a VoIP platform. It sells to circa 800 customers.

In the last set of filed accounts at Companies House for the fiscal year ended 31 October 2014, C4L reported an operating profit of £239,314, down 53 per cent year-on-year and sales of £13m, up from £12.2m. A delayed network upgrade was blamed.

According to CSI, trade for the three months ended 31 January 2016 indicated a run rate for this year of £14m. Some 90 per cent of revenues are recurring.

The 45 staff based in Bournemouth and London Docklands will move across to CSI, including C4L founder Matt Hawkins and CEO Simon Mewitt, who will become group CTO and COO respectively.

This is the second time in as many months from CSI; it splashed £34.8m on Selection Services in January to roll up companies in the fragmented mid-market managed services sector. The plan is to bulk out top line revenues to £100m inside three years.

Selection Services sells infrastructure, network and cloudy services. In the 12 months ended 30 June 2015, it turned over £30.7m, down from £31.8m in the prior year, and reported operating profit of £1.1m, versus £30,796.

Analyst Megabuyte said the buy makes sense, “with the combination of managed services and networks meeting the increasing trend among UK mid-market businesses to buy properly converged services from fewer suppliers in an increasing hybrid cloud/ IT world”. ®

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