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Wachovia Capital Buys

Wachovia Capital Partners has acquired Delaware web hosting provider, and is looking for additional acquisitions.

Wachovia Capital Partners has acquired Delaware web hosting provider, which will be run by two veterans of the data center industry. The company was founded in 1997 by Lou Honick and Neil Heuer, and has grown into a $20 million-a-year business with more than 250 employees. Honick, who is a familiar face for his presentations at hosting industry conferences, will remain with the company with a new title of chief strategy officer.

Wachovia said it intends to use HostMySite as a vehicle to acquire other hosting and data center businesses. "We bought (HostMySite) based on the expectation that they're going to continue to grow as they have in the past," said Scott R. Stevens, a principal at Wachovia Capital, told the Delaware News Journal. "In addition to that, we do hope this acquisition will be a good platform that we will use to acquire other similar businesses."

Wachovia has hired Art Zeile and Joel Daly to serve as HostMySite's CEO and COO, respectively. Zeile and Daly held similar roles at Inflow, a managed hosting company they founded and later sold to SunGard Availability Services in 2005.

Zeile and Daly previously worked together in the Air Force's satellite program, and then at LINK-VTC, a provider of videoconferencing services. At Inflow, the pair focused on operating data centers in second-tier markets such as Austin, Irvine, Minneapolis, Nashville, Phoenix, Pittsburgh, Philadelphia, Portland, Raleigh/Durham, Sacramento, San Diego and St. Louis.

These smaller regional markets have experienced strong growth in the past several years, boosting regional data center providers such as Peak 10, ViaWest, Colospace and TEAM Companies. Wachovia Capital isn't the only private equity firm in acquisition mode in this sector, either, as Managed Data Holdings and ABRY Partners have also made multiple deals for regional providers.

"With greater access to financial capital, will continue as a leader in our industry," said Honick. "We believe that we have great prospects for growth and can further expand our reputation for quality of service, deep expertise and solid execution."

On Friday HostMySite said it received a $274,000 grant from the state of Delaware to buy three generators for a new 15,000-square-foot data center.