Acquisitive IBM and SAP partner CSI has closed its first major deal since taking on fresh private equity investment last summer, snapping up £15m-revenue rival Niu Solutions.
Banking and insurance specialist Niu Solutions is one of IBM's top partners, but swung to an £8m operating loss in its last financial year after losing major client Metro Bank.
CSI chief executive Simon Payne (pictured) told CRN the deal would propel CSI's run-rate revenues to £57m and EBITDA margin to over 20 per cent.
"Niu had been struggling for the last couple of years. Metro Bank was the cornerstone of Niu's business and they had been struggling to right-size the business since then," he said.
"CSI is incredibly financially stable, and this acquisition made perfect sense for us because it has a lot of complementary skills."
Ranked #172 in CRN's Next 100 report, Niu Solutions is an IBM SoftLayer specialist and also hands CSI additional skills around Microsoft Azure. Based in Bagshot, it has about 80 staff.
CSI chief technology officer Mark Vargo said combining the two businesses creates a "very wide church of cloud infrastructure offerings".
"CSI were really good on traditional, core, hard-to-manage environments around SAP and IBM middleware - those environments that are difficult to move to the cloud," he explained.
"We spent a lot of time, money and effort building a Power Systems-based cloud, and Niu did exactly the same thing, but in the regulated banking and insurance market. They are very similar to us insofar as they tackled the very difficult application spaces and turned them into a cloud environment. We both did Softlayer, but they were a lot deeper around Windows, Azure and x86, and we did a lot around IBM system i and system p with AIX and Linux."
Whether or not Niu's current management - including CEO Shaun Ledgerwood - stay on will be determined during an integration process that will occur over the "coming weeks", Payne said.
CSI appointed Payne as CEO last October after receiving new investment from MML in August, which saw CSI's previous top execs Alan Watkins and Kevin Lewis move back into non-executive roles.
"We have a very strong organic and acquisition strategy following the investment from MML," Payne said. "This is the first one of any note but we will very much be moving forward on the acquisition front, as well as targeting some very strong organic growth."
Despite its heavy operating losses last year, Niu will fuel a "step change" in CSI's profitability, boosting its EBITDA to over 20 per cent, Ledgerwood said.
"Their issue was that they were struggling with scale, and CSI brings that scale," he said. "It's a business populated with highly capable, very technical people, that is very complementary to our own skills and really helps us drive forward with our cloud services provider proposition."
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