LDC Backs Management Buy-Out Of Node4

LDC has completed a significant investment to support the management buy-out and continued growth of Node4, the leading regional data centre, managed IT and communications specialist.

Node4 provides a wide range of data centre and managed IT services, including colocation, connectivity, managed hosting, communications & hosted telephony, and a range of cloud services, to a UK-wide network of around 700 fast-growing SME customers.

Established in 2004, the business is headquartered in Derby and operates four state-of-the-art data centre facilities – two in Derby, one in Northampton and a further site in Leeds – which all offer the latest in technology and security measures, ensuring that even the most mission-critical IT applications are hosted securely and protected. Node4’s regional data centre infrastructure ensures that it has relatively close proximity to its UK SME customer base, setting it apart from its London-centric competitors by providing a high touch, local service proposition.

Node4 has experienced significant growth in recent years as a result of expanding its data-centre portfolio supported by its market leading service offering, underpinned by a continued growth in IT outsourcing and an increasing demand for hosted IT. The business has an annual turnover of more than £13million and employs over 60 people across its regional footprint.

The deal will provide further capital to help accelerate the continuing growth of Node4, primarily through continued new data centre development, whilst also facilitating the potential acquisition of complementary businesses operating in the data centre and cloud services markets. The transaction also enables the other co-founding shareholders to fully exit the business.

LDC has backed Node4’s existing management team led by Managing Director and co-founder Andrew Gilbert, who will retain a significant shareholding.

The deal was led by LDC’s Regional Managing Director Martin Draper, together with Investment Directors Andy Lyndon and James Robinson. Martin Draper will join the board with immediate effect.

As part of the transaction, the existing management team will be further supported by the appointment of David Goldie as Non-Executive Chairman and Bernie Waldron as a Non-Executive Director. Previously Chief Executive of TalkTalk Group and Chairman of Opel Telecom, Mr Goldie has a strong track record of working with fast growing entrepreneurial businesses and brings significant expertise in the wider managed hosting and IT services industry. Mr Waldron has held a number of senior positions at IBM across Europe and brings substantial M&A and IT services experience to the business.
Commenting on the investment, Martin Draper, LDC’s Regional Managing Director said:

“Node4 is a well-established market leading regional data centre services business, operating in a rapidly growing market that is being driven by a growing demand for hosted IT services by SMEs across the UK.

“We are partnering with a high-quality management team led by Andrew Gilbert, who has considerable knowledge and experience in the regional data centre services market having founded the business back in 2004. The company provides a high-end service to its regional customer base, and is supported by a well invested infrastructure. Going forward, we will work closely with the team to execute the next phase of the business’ growth and development.”

Andrew Gilbert, Managing Director of Node4 said:

“LDC’s investment and support brings additional strategic input and financial backing to our business and reflects the confidence both parties have in Node4’s future potential. Looking forward, we anticipate that LDC’s support will allow us to further strengthen our UK regional market leading position, invest for future growth both organically and through acquisitions, as well as continuing the provision of high quality data centre and cloud services for all our customers, existing and new.”

LDC completed the transaction with support from a number of Midlands-based advisors and funders, including KPMG, who provided financial and tax due diligence, and Browne Jacobson, who acted as legal adviser to LDC and Newco. The vendors were advised by PwC Corporate Finance and Pinsent Masons. The Structured Finance team at RBS Birmingham provided a package of senior debt plus growth capex facilities to support the buyout, and were advised by Eversheds.

The deal with Node4 forms part of LDC’s continuing strategy of investing in leading mid-market businesses, backing high calibre ambitious management teams. It represents LDC’s eighth new investment of 2013, having invested over £149million of new funding, together with further £40million of capital to support portfolio business acquisitions. Last year LDC invested over £300million across 18 investments.

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David Dungay

Editor - Comms Business Magazine
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