Six Degrees Group gets £12m cash boost

Firm plans to pump new money into organic growth, but acquisitions still on the agenda

Bullish Six Degrees Group (6DG) has received a fresh pot of cash worth £12m from its private equity backer, and plans to invest it in organic growth.

Its backer Charlesbank Capital Partners - which bought 6DG from Penta Capital last summer - has made the extra £12m available to the company on top of what it had already planned for the firm.

The company, which provides businesses with comms services and hosting services, plans to pour the cash into recruiting more than 50 staff across the business as it looks to become the UK's largest mid-market managed services provider.

The move to invest organically marks a slightly new direction for the firm's strategy which has recently focused heavily on acquisitions. The company made three last year and 13 before that.

Campbell Williams, 6DG's group strategy director, told CRN that both the organic growth plans are unique.

"It allows us to make some organic investment and that is where we think we're breaking new ground," he said. "I hesitate to use the word 'unprecedented' but I genuinely can't think of anyone of our size making this level of investment - eight-figure sums of money, 50-plus people being recruited. We are bringing in people all across the business and ultimately that's going to drive organic growth."

He said the new staff will work in marketing, pre-sales and tech as well as sales.

Williams added that 6DG's business model is unique.

"If you take the global telcos out of the mix, most people in our sector tend to fall into one of two camps: they are either a reseller - and resellers, if they're not lifestyle businesses, are very focused on short-term profits - or they are listed companies which need to report to the AIM market every six months.

"We're happy to sacrifice short-term profitability to pump in both money and people to drive top-line growth - purely organic. Short-term profitability will drop - Charlesbank knows that, senior management know that - and we are more than happy to, not take that risk, but make that decision so the long-term profitability will be up significantly."

He said the second, third and fourth years of the strategy 6DG is putting in place are when it will see it pay off in terms of profits.

Although the £12m cash injection will not go on acquisitions, 6DG said M&A is still on the agenda for 2016.

"We did three last year and with the first round of money we did 13 in fairly short order. We're not going to do that many again. At some stage in 2016 we will... definitely do a couple. It's all part of supporting the same exercise - we don't do recruitment for recruitment's sake and we don't do acquisitions for acquisitions' sake. We do it for a reason."