Fresh from its takeover of managed service provider (MSP) Selection Services last month, Castle Street Investments (CSI) has completed a £20.2m deal for network services player C4L Group.
Castle Street Investments was previously a dating website but sold its assets to become an investment vehicle. Last month it received investment from MXC Capital. Following this it acquired Selection Services, and MXC partner Andy Ross, who joined CSI as its new CEO, told CRN he was looking to create a £100m buy-and-build mid-market player.
Now CSI has made a second acquisition, this time taking on C4L, which provides network services and datacentre hosting from its own datacentre. For its year ending 31 October 2015, C4L's sales were £13.9m.
Ross said the deal is a significant step for the firm on its journey to be a leader in cloud and managed services.
"We wanted to have the ability to put the managed services capability we bought with Selection, with a modern network and data infrastructure provider," he said. "That is what C4L have been building for the last few years. They have a modern, high-capacity, high-performance MPLS network and a datacentre in Bournemouth that we can use to offer a modern network-based solution for our client base.
"It's moving us towards what we wanted to be, which is an integrated managed services and cloud provider with our own assets; it's a big step forward," he said. "It allows us to have control over network capacity and performance."
Following the deal, Ross said there will be no office closures for C4L which has bases in Bournemouth and Docklands. He said the firm will operate under a new brand, neither C4L nor Selection, but a name has yet to be decided.
He said that both firms will be integrated as one company.
"Both companies bring complementary tools and services and both have a skilled workforce. The ability to bring that together and provide better value to our client base is great," he said. "We will run it as one business, with one sales and delivery team providing standalone managed services and cloud-based solutions and a network datacentre [offering]."
Following the deal, C4L chairman Mathew Hawkins and Simon Mewett, C4L CEO, will join the board of CSI as its CTO and COO respectively. Ross said having these figures on board will be a boost for CSI.
He also indicated that further acquisitions could be made in the managed services space again or with another datacentre.
The deal was funded by the investment from MXC in CSI and was made up of £14.2m in cash and the allotment of 18,346,918 new ordinary shares.
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