Infinigate leaps into Middle East market with Starlink acquisition

Acquisitive distributor acquires cybersecurity distributor Starlink, its third in three months

Infinigate has expanded into the Middle East and African markets through its acquisition of cybersecurity distributor Starlink.

Based in UAE, Starlink was founded in 2005 and claims to be the "fastest growing and largest" cyber and cloud distributor in the Middle East and Africa with annual revenues of $500m and forecasted year-on-year revenue growth of 20 per cent.

The value-added distributor claims to be the largest cybersecurity distributor in the Gulf Cooperation Council (GCC) region (comprising Bahrain, Qatar, Kuwait, Oman, Kingdom of Saudi Arabia and the UAE) where it claims to have 20 per cent market share.

The distributor employs 300 staff across 11 countries, carrying a portfolio of 60 vendors and a customer base of 1,500 resellers.

The deal will bring Infinigate's total turnover to around €2.2bn in 2023 and increase its headcount to more than 1,100 staff.

With Starlink, Infinigate now sells to more than 50 countries and has offices in more than 30.

Although legally an acquisition, Infinigate CEO Klaus Schlichtherle said combining with Starlink "feels more like a merger".

The acquisition is Infinigate's third in just three months. It acquired the cybersecurity and networking divisions of UK distributor Nuvias in July and then went on to snap up UK-based Microsoft CSP Vuzion in August.

The Starlink acquisition will bring new vendors to Infinigate, opening an opportunity for them to sell across Infinigate's core SMB customer base and Starlink's enterprise-level customers.

Starlink will operate under the Infinigate Group banner post-acquisition, with its joint founders Mahmoud Nimer and Nidal Othman remaining with the business.

Othman will take on a new role as CEO of the Middle East and Africa (MEA) region and help grow Infinigate's vendor portfolio globally. Nimer will meanwhile become president of the MEA region. Both will report to Infingate Group CEO Schlichtherle.

Speaking to CRN, Schlichtherle said that Infinigate is "done" with making acquisitions for the rest of this year but hinted that more M&A could be on the agenda in the future.

"There's always a little bit of a pipeline for the future. But that's not going to happen this year; I think we are done," he said.

Some have speculated that rising interest rates globally could slam the brakes on M&A activity in the channel, making companies more hesitant to finance M&A through loans as rates continue to climb.

Schlichtherle said that any smaller acquisition in the future will come from Infinigate's cash flow, but said that the company could be more cautious about pursuing larger M&A deals.

"Moving forward there will be maybe some second thoughts about spending big time money," he said.

"I think we did the acquisitions at the right time with the historically low rates that we have had."

"For bigger acquisitions, we would need to look at what the value proposition is… interest rates increasing will have an impact, but it won't be material."

Othman said that around 70 per cent of Starlink's revenue is in cybersecurity with the remaining 40 per cent coming from cloud.

The acquisition will bring partnerships with vendors including Palo Alto, Symantec, Infoblox, F5 Networks and Juniper Networks into the Infinigate Group. These vendors will now have an opportunity to expand their business into Infinigate's core partner base in the SMB and mid-market space.

Starlink previously attempted to expand outside of the Middle Eastern market and into Europe organically. It opened a hub in the UK in 2016 and had ambitions to launch into the Benelux and DACH regions.

Othman said that teaming up with Infinigate was the best way for both parties to achieve geographic expansion.

"We tried to go to Europe and do something from scratch, but we found it is not something you can do alone. That's why we felt that we need to have this partnership that can help support us to scale now within the region.

"We need to scale into the commercial market. The vendors that we have are very much playing in the enterprise area, so we see it as a massive opportunity in the commercial space, and that's where Infinigate can play a key role in enabling us to get into the commercial space with their expertise."

Schlichtherle said that after a year of several large acquisitions, the company will spend the next 12 months pulling the businesses together under the Infinigate brand.

"There will be a fusion of all the different cultures from all the companies. We will stay with the name Infinigate, but Starlink will have a huge influence on the group, Nuvias will have a huge influence on the group. Everybody has their strengths and we need to take the best of all worlds to effectively create a new enterprise.

"That will take 12 months at least; but we will basically put groups together from all companies to create a new branding and a new setup. We need to align with a new mission and purpose statement - we all have our own and they are quite similar but we need to get together and agree on that stuff.

"And then moving forward we will create one family. It will take a bit of time, but I'm really excited about the opportunity to have this fusion of all these different influences in the new enterprise."