Private equity firm Welsh, Carson, Anderson & Stowe has acquired a majority interest in data center service provider Peak 10, the company said today. Welsh Carson, a veteran investor in the data center sector, partnered with Peak 10 management to buy a controlling interest from selling shareholders Seaport Capital and McCarthy Capital.
The deal highlights the private equity sector's keen interest in the data center industry, and follows a similar transaction last month in which GI Partners bought a majority stake in SoftLayer Technologies.
Combining Organic Growth and Acquisitions
Peak 10 has focused on building data centers in second-tier markets in the southeastern U.S. The company has grown through its acquisitions of existing data center providers and facilities. Peak 10’s existing management team will continue to operate the business, led by President and CEO David Jones.
“Our partnership with Welsh Carson enables Peak 10 to continue increasing the scale of our business to meet the high demand for data center infrastructure and related managed services,"said Jones. "Our strategic focus remains intact but our resources now position us to more rapidly extend our geographic footprint, strengthen our team and further accelerate our managed services and cloud offerings.”
Since its founding in 2000, Peak 10 has pursued gradual growth through expansion in greenfield markets of Jacksonville, Fla.; Charlotte, N.C.; Tampa, Fla. and Raleigh, N.C., and through acquisitions of established data center companies in Louisville, Ky.; Nashville, Tenn.; Richmond, Va. and, most recently, Fort Lauderdale, Fla.
"Through its organic growth as well as strategic acquisitions and greenfield activities in entering new markets, Peak 10’s management team has continually outpaced its competition," said John Clark, general partner at Welsh Carson. "The company’s growth has been impressive and we are excited to add Peak 10 to our portfolio of business services companies."
A Veteran Data Center Investor
Welsh, Carson is familiar with the data center industry from its positions in Savvis Communications, Amdocs Limited and and SunGard Data Systems.
“We are extremely proud that Welsh Carson, one of the largest and most successful private equity firms in the United States, is investing in Peak 10 and our leadership team,” said Jones. “More than ever, our management team remains committed to expanding into new metropolitan markets with attractive growth prospects and deepening services that provide scalable solutions to our customers.”
Seaport Capital was an investor in Switch & Data, and currently operates American Internet Services of San Diego.
“Seaport Capital has enjoyed its 10-year partnership with Peak 10,” said Scott McCormack, partner at Seaport Capital. “Working with and supporting the Peak 10 management team’s vision to grow the business from two sites into a leading data center facilities and managed services provider as a super-regional force in ten markets has been a great experience and we wish the management team and company continued success in the future.”
McCarthy Capital acquired its position in Peak 10 from Frontier Capital in 2009.
The transaction is expected to close in early October. Signal Hill Capital Group LLC acted as exclusive financial adviser to Peak 10 in connection with the transaction. Womble Carlyle Sandridge & Rice, PLLC was legal counsel to Peak 10, and Kirkland & Ellis LLP served as legal counsel to Welsh, Carson, Anderson & Stowe in relation to this transaction.