Alastair Mills returns to sector with £60m funding

Ex-SpiriTel chief executive, Alastair Mills, has returned to the industry with the formation of a new Group, focussed on managed data services. Following a significant fundraise and the acquisition of datacentre UKSolutions, MPLS provider NetworkFlow and voice services company Protel, the new Group has 60 staff across four offices and 900 customers.

The SpiriTel management team, led by Mills and with the backing of Penta Capital, was responsible for bringing SpiriTel back to profitability before growing the company rapidly via a swiftly executed buy-and-build strategy. Between 2007 and 2010, SpiriTel grew through 12 acquisitions to reach over £35million revenue with exceptional levels of profitability and UK-wide customer sales and support from almost 200 staff across five offices. The acquisitions were carefully integrated using the team’s tried and tested framework which helped deliver a market-leading organic growth rate of over 20 per cent. When SpiriTel was sold to Daisy for £37million in November 2010, Penta Capital realised a near 200% return on their 2009 investment.

Penta Capital is backing Mills again and has led a lucrative fundraising exercise to raise £60million for the new Group, representing one of the largest single investments in the sector in recent times. Mills has retained his core team from SpiriTel, including CFO Ronnie Smith, commercial director Jonny Shanmuganathan and company secretary Andrew Booth. Another significant senior hire is expected to be confirmed within the next week.

The three initial acquisitions provide a formidable growth platform for the new Group which will expand through a clear strategy of providing three key managed data services elements: core, connectivity and overlay services. UKSolutions provides core enablement: through its 15,000 square feet of datacentres spread over two sites it delivers solutions that include the provision of dedicated managed hosting environments, hybrid cloud infrastructures and full private cloud architectures.

NetworkFlow provides access and WAN connectivity: through its own next generation network it provides high-bandwidth connectivity solutions for enterprises. It designs bespoke networks via more than 20 interconnects with major UK providers. Protel provides overlay converged services that leverage the underlying core infrastructure and access technologies. Its services include Global inbound and outbound voice delivery, voice business continuity solutions, fixed mobile convergence solutions and SIP trunk migration services, all managed via its bespoke customer portal. To complete its converged communications portfolio, the Group expects to acquire mobile voice and data capability in the near future.

The UK managed hosting market grew at a historical 4 year CAGR of 18% to 2010 (Gartner) and European market growth is expected to accelerate to 23% CAGR to 2013 (The 451 Group). By the end of 2011, cloud computing services are expected to generate 15% of worldwide technology spend with anticipated annual growth of 26% to 2015. This CAGR represents five times the growth rate of the tech industry as a whole (IDC).

At the time of announcement, Mills made the following statement: “SpiriTel was one of the fastest growing voice companies in the UK before its acquisition last year. This was testament to a hugely talented and driven management team that delivered over 20% organic growth, through a recession, in a declining market. I am delighted to be working with the team again following our recent £60m fundraise.

The market trends identified by both analysts and end-user clients are the same: managed data services will continue to grow rapidly, driven by the demand for cloud connectivity and virtualisation. At SpiriTel we faced a challenge familiar in the market: we were a voice company trying to turn into a data company. This time, our Group is very firmly focussed on growing from a strong data services core: we’re starting with 15,000 square feet of datacentre space, a next generation network and a full suite of IP voice services. We are ideally positioned to capitalise on an exciting growth market.”

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