Cloud hosting firm expands with £9m acquisition
Cloud hosting firm SysGroup has bought a firm in South Wales for £9m.
The Liverpool based company, which has been shortlisted for this year’s Business Masters Awards, has conditionally agreed to acquire Certus IT Limited.
Certus is a profitable and cash-generative managed IT services and cloud hosting provider based in Newport.
The deal is for an initial cash consideration of £8m on a debt free cash free and normalised working capital basis, increasing to a maximum cash consideration of £9m dependent on the performance of Certus in the 12 month period following completion.
SysGroup has also announced it has raised £10m, before expenses through a share placing.
The acquisition is in line with the firm’s strategy of supporting organic growth with select acquisitions.
Certus will help to bolster the group’s existing managed service offerings, by expanding the current customers base, significantly adding to its managed connectivity portfolio and further strengthening the existing relationship with Dell EMC.
SysGroup has also conditionally re-financed its existing term loan facility as a £1.75m term loan over five years and arranged a new £3.25m acquisition revolving credit facility with Santander to provide additional financial flexibility.
Adam Binks chief executive of SysGroup, said: “I am delighted to have completed the placing and we are very pleased with the significant support we have received from both new and existing shareholders.
“The funds raised coupled with the new bank facilities will ensure the group is well positioned to continue to invest in opportunities for growth.
“Further, I am excited to be welcoming both the Certus team and its customers to the SysGroup family.
“The addition of Certus to the group represents a step-change in terms of the scale of the business, and we believe the enlarged Group will be better positioned to penetrate our target market and drive further growth.
“This acquisition fits within our strategy of growing the business organically and through strategic acquisitions, and we are excited by the prospects that lie ahead.”
Certus was founded in 2000 and currently provides services to approximately 130 customers who typically have 50-250 users.
Customers include Admiral, Confused.com, gocompare.com, Hugh James and London Executive Offices. Certus has contracted future income of approximately £8.7 million for the three years ending 31 December 2021, of which £4.4 million is contracted for the year to 31 December 2019.
The existing executive management team of Certus will remain with the enlarged Group after completion.