Node4 set for more growth after winning private equity backing

Node4, which has an office in Leeds, helps SMEs (small and medium-sized enterprises) to manage their IT systems more efficiently.

LDC, the mid market private equity house, has completed a significant investment to support the management buyout and continued growth of Node4.

Node4 provides a range of data centre and managed IT services, to a UK-wide network of around 700 fast-growing SME customers.

Established in 2004, the business has its headquarters in Derby and operates four data centre facilities. Apart from Leeds, it has two sites in Derby, and one in Northampton.

A company spokesman said: “Node4 has experienced significant growth in recent years, as a result of expanding its data-centre portfolio.”

It has an annual turnover of more than £13m and employs more than 60 people across its regional office network. Nine staff are currently based in Leeds.

The deal will provide further capital to help accelerate the growth of Node4, with a focus on new data centre development.

The deal could also lead to the acquisition of businesses operating in the data centre and cloud services markets.

LDC has backed Node4’s existing management team, which is led by managing director and co-founder Andrew Gilbert, who will retain a significant shareholding.

The deal was led by LDC’s regional managing director Martin Draper, together with investment directors, Andy Lyndon and James Robinson. Mr Draper will join the board with immediate effect.

As part of the transaction, the management team will be supported by the appointment of David Goldie, as non-executive chairman, and Bernie Waldron, as a non-executive director.

A former chief executive of TalkTalk Group and chairman of Opel Telecom, Mr Goldie has worked with a large number of fast growing businesses. Mr Waldron has held a number of senior positions at IBM across Europe, and brings substantial merger and acquisition and IT services experience to the business.

Mr Draper said yesterday: “Node4 is a well-established market leading regional data centre services business, operating in a rapidly growing market that is being driven by a growing demand for hosted IT services by SMEs across the UK.

“We are partnering with a high-quality management team led by Andrew Gilbert, who has considerable knowledge and experience in the regional data centre services market having founded the business in 2004.

“The company provides a high-end service to its regional customer base, and is supported by a well-invested infrastructure.

“We will work closely with the team to execute the next phase of the business’ growth and development.”

Mr Gilbert added: “LDC’s investment and support brings additional strategic input and financial backing to our business, and reflects the confidence both parties have in Node4’s future potential. We anticipate that LDC’s support will allow us to further strengthen our UK regional market leading position, invest for growth, both organically and through acquisitions, as well as continuing the provision of high quality data centre and cloud services for all our customers.”

LDC completed the transaction with support from a number of advisers and funders, including KPMG, who provided financial and tax due diligence, and Browne Jacobson, who acted as legal adviser to LDC and Newco. The vendors were advised by PwC corporate finance and Pinsent Masons.

The structured finance team at RBS Birmingham provided a package of senior debt plus growth capex facilities to support the buyout, and were advised by Eversheds.

The deal with Node4 forms part of LDC’s strategy of investing in mid-market businesses,

It represents LDC’s eighth new investment of 2013.

So far this year, LDC has invested more than £149m of new funding, together with further £40m of capital to support portfolio business acquisitions.

Last year LDC invested more than £300m across 18 investments.

LDC, which is part of the Lloyds Banking Group, backs management teams from UK-based companies seeking between £2m and £100m of equity for management buyouts, institutional buyouts or development capital trans-actions.

Since its formation in 1981, LDC has completed more than 500 investments.