Clipperton Finance, a leading European corporate finance boutique serving the technology and media industries, has released a Research Paper covering the evolution and current trends of the Data Management market. The essentially virtual “New Economy”, is in fact inherently tied to the very physical world of traditional Data Center and Telecom networks. In this era of online advancement, these physical networks are placed under unprecedented new demands through the proliferation of online rich media and cloud computing leading to an explosion in storage capacity and networking needs. In turn, the virtual data underworld is undergoing a true revolution. One consequence is remarkable: as the cost and complexity of managing Data Centers increases exponentially, this function is more and more outsourced by the large companies that previously managed their own infrastructure on-site. This paper focuses on this Outsourced Data Center market and demonstrates how this particular value chain is maturing and organising itself: · Upstream: a new category of players have rapidly emerged – the Wholesalers. · Downstream: Hosting offerings are experiencing significant commoditizing pressure and need to act fast. · In the middle: the “Colocators” need to find there position in this newly organized ecosystem. Today this value chain is dominated by large US companies, but significant European exceptions exist: OVH in France, Telecity in the UK, 1&1 in Germany. The paper also features European players that we deem “ones to watch”.
As investment needs are growing exponentially, a specialized asset class isemerging upstream: Wholesale Vendors. These new players offer realestate and technical infrastructure management services allowing clients’to improve capital efficiency by focusing investments on their core business.
Wholesalers are deploying large amounts of capital with low risk long-termreturns.
Hosters are facing key challenges…i) Traditional data hosting becomes largely commoditizedii) High value cloud services have emerged down the value chain
… And need to move fast:i) Mainly going downstream (incorporating high tech cloud services)ii) And Consolidating for scale
New Asset Class: Wholesalers
?
A Fast Maturing Outsourced Data Management Value Chain
For most Companies, Data Management needs are growing too fast andbecome too complex to be handled internally.
Naturally, the fast growing Outsourced Data Management Market isorganizing itself around highly specialized operators in a rapidly structuringvalue chain.
Rationale:Increases scale and reach of Cogeco Cable's IT hosting business: addition of infrastructure including 19 Data Centers and 21 points-of-presence throughout NA & EU.
AQCUIRES
TRANSACTION DETAILSRationale:Combines SoftLayer with IBM SmartCloud into a global platform; acquires 21,000 customers across 140 countries.
Rackspace Example: Differentiation Seems to be Paying Off
25
Also Outperforming Hosters and Cloud Services in terms of Value Created for Shareholders
Revenue Growth Contrasts with other Hosters and Exceeds Cloud Services growth
The success of Rackspace (a serial acquirer and developer of innovative cloud services) suggests thatthe first strategy for winners will be to move downstream
• A 23k sq.ft. Facility located in US Southeast's most active datacenter cluster that will provide Centrilogic with direct access to new large enterprises.
Jul-12 $1.1b - -
• A deal part of DRT strategy to better address the European market.
• 750k sq.ft. facility in London for $1.1b, showing a valuation of $1.5k/sq.ft.
Jul-12 $320m $40-45m 7-8x
• Asia Tone strengthens Equinix position in the Asia-Pacific region
• The deal values the 80K sq.ft. of Data Center space at $4k/Sq.ft.
Asia Tone
Aug-11 $144m $22m 7x
• The deal allows Telecity to better capture the strong and growing demand for storage capacity in Ireland
• Telecity acquired 64sq.ft. At $2.4k/sq.ft.
Oct-13 $440m $85m 5x• Enables NTT Com to more than double its Data
Center space in the US.• NTT will also use Raging Wire’s patented
Selected European Players – Focus on Telecity Group
38
Key Figures Presentation
Founded:
Nationality:
Rev. 2013:
Rev. 2012:
Market Cap.:
EV/EBITDA:
PER
Leading colocation provider in Europe with 33 Data Centers spread over key Tier I locations (London, Paris, Amsterdam, …).
With 10+ acquisitions since inception, Telecity has proved a key consolidator on the European colocation scene.
1998
UK
£329m
£283m
£1.4B
10.8x
20x
Context & Positioning
Thanks to an aggressive consolidation strategy and a well-handled execution,Telecity has managed to display an impressive 20% revenue growth CAGRfrom 2008 to 2013 making the Company one of the leading colocationprovider in Europe.
Telecity announced the launch of Cloud-IX, a cloud-neutral ecosystem thatwill be rolled out to customers and provide direct connectivity with cloudproviders such as Amazon Web Services, iland, CSC, Fujitsu, Outsourcery, etc.
Equinix8% Telecity
8%Interxion
7%Telehouse
4%Deutsche Telekom
4%Orange; 3%
Interoute; 2%BT; 2%
Colt; 2%
Other local players 60%
Source: Synergy Research Group
Retail Colocation Market Leaders – EMEAQ3 2013
Telecity has consistently outpaced LSE index (base 100)
Selected European Players – Focus on Global Switch
39
Key Figures Presentation
Founded:
Nationality:
Rev. 2012:
Asset Value:
Est. EV
Founded in 1998 by the Reuben brothers (UK’s 2nd net worth individuals).
One of the largest carrier-neutral wholesale Data Centers vendors in Europe with 9 Data Centers spread over Tier I locations (London, Paris, Amsterdam, …).
Tier I clients include IBM, Cap Gemini or Atos.
1998
UK
£313m
£3.8B
£2.2-2.5B
Context & Positioning
(based on comps.)
With a specific Carrier-Neutral x Wholesale positioning, Global Switch hasmanaged to compete with the larger US-based players such as DigitalRealty or Dupont Fabros.
Global Switch is currently focusing on the Asian market where demand isbooming with large projects underway (Sydney, Hong-Kong, Singapore)and a newly appointed Managing Director to lead the Asian expansion. + Singapore & Sydney
Developer of advanced cloud software and management solutions.
Strong international reach (Europe, US, Asia).
Multi-awarded software solution (incl. Gartner’s Cool Vendor in Cloud Management 2011, 2013 Red Herring top 100 Europe).
2006
UK
n.a.
n.a.
$24.2m
Balderton, Nauta, Oxford Capital
+ Others
Context & Positioning Abiquo positions itself at the point at which enterprises are seeking to migrate from
legacy software systems to cloud based services.
To address this, Abiquo’s cloud computing toolkit enables enterprises to build,integrate and manage public and private clouds via a single homogenousdashboard environment.
Key Figures Presentation
Founded:
Nationality:
Rev. 2011:
Rev. 2010:
Funding:
Investors:
Provider of cloud orchestration software for on-demand, fully automated provisioning of cloud services.
Spun out from hosting company XCalibre Communications.
Cloud Orchestrator is now implemented by 100+ EU service providers.
2009
UK
n.a.
n.a.
$10.5m
Leopard Rock Capital
Context & Positioning
Flexiant acts as a facilitator in the trend for traditional hosting providers seeking tooffer more downstream, value add services. Of particular focus are telcos that wantto use their existing infrastructure to become fully fledged infrastructure-as-a-serviceplayers. By integrating Flexiant’s software, such service providers broaden theirhosting offerings into more advanced cloud services.
The recent fundraising will be used by Flexiant for international expansion,particularly in the US.
Initially a Cloud Management SW offering, Onapp has pioneered the federated cloud model enabling their network of Service Providers to offer at scale CDN services, and storage.
900 clients in 87 countries, Signing 20-30 new SP’s per month.
2010
UK
n.a.
n.a.
$20m
LloydsDevelopment Capital
Context & Positioning Onapp has emerged in response to the widespread commoditization of traditional
hosting services and dominance of Amazon in the IaaS space. Their solution targetsthe significant longtail of hosters struggling to compete with Amazon’s sheer scale.
As many of the core building blocks of cloud hosting are now able to be bought off theshelf, Onapp has developed software that enables smaller hosters to operate anetwork or “federated” cloud model thus enabling the scale and product diversity ofbigger players.
Onapp plans to further utilize it’s network of service providers to offer a truemarketplace for cloud infrastructure.
Key Figures Presentation
Founded:
Nationality:
Rev. 2011:
Rev. 2010:
Funding:
Investors:
Cloud management platform for complex, virtualized and physical enterprise applications.
Product portfolio includes the eCloudManager based on Information Workbench semantic platform.
Numerous awards winner, including Computerwoche Best in Cloud Award 2012 (Category IaaS – Private Cloud).
2008
DE
n.a.
n.a.
€6m
Founder, SAP-Co-Founder
Context & Positioning
Fluid Operations offers a semantic cloud and Data Center managementsolution to overcome the complexities that enterprises experience inmanaging complex, virtualized application environments.
Offers automated handling of daily operations of a private or public eCloud.
Serves enterprise customers, such as Daimler, F.IT, SAP, Statoil and T-Systems.
Selected European Players – Energy / Environment Management
43
Key Figures Presentation
Founded:
Nationality:
Rev. 2012:
Rev. 2011:
Funding:
Investors:
Energy & environment management system for Data Centers.
In-house developed hardware, firmware and software.
Integration with third party components.
Mainly active in Europe (25 FTEs).
2009
BEL
n.a.
n.a.
$13m
PMV-VinnofPartech Ventures
Big Bang Ventures
Context & Positioning Racktivity offers hardware and software solutions that enable detailed
monitoring of Data Center infrastructure in order to minimize systemfailures and downtime for end customers.
Energy management is absolutely key as energy usually accounts for the bulkof Data Center operating expenses.
The software combined with a family of PDUs and sensors measure, monitorand manage power across distributed Data Centers and gives customers fullvisibility and control of Data Centers’ energy consumption.
Provider of application provisioning and management services for Ruby on Rails.
Build PaaS from scratch on any public or private cloud vendor or your own infrastructure.
Offices in the UK and the US.
2011
UK
n.a.
n.a.
No fundingto date
Context & Positioning
Innovative solution combining the convenience of Platform-as-a-Service(PaaS) with the control and flexibility of Infrastructure-as-a-Service (IaaS).
A very fast way to market, while still allowing clients to maintain theircontrol over their infrastructure growth and expenditure for the lifetime oftheir projects.
Provided as a service and charged per server per month.
Key Figures Presentation
Founded:
Nationality:
Rev. 2012:
Rev. 2011:
Funding:
Investors:
Cloud computing hosting PaaS.
Runs all the major languages (Java, Scala, Ruby, Python, PHP, etc.).
Hosted in French Data Centersin Paris.
10 FTEs (as of Jan. 2014).
2010
FR
€1-3m
n.a.
Undiscl.
KimaVentures
Context & Positioning
Provides Cloud computing hosting, for high-performance and easy-to-manageJava/PHP/Ruby based web applications.
Each hosted application is highly secured (https protocol, backups, 24/7monitoring and support, specific virtual machine, etc.).
Designed to make developers’ life easier and let them focus on their corebusiness (easy testing, deployment and production).
Selected European Players – Cloud Hosting Software
46
Key Figures Presentation
Founded:
Nationality:
Rev. 2011:
Rev. 2010:
Funding:
Investors:
PaaS provider for web applications development and operation.
Integrated add-on marketplace with 3rd party services.
Won ECO Award (category “Hosting”) in 2009.
Mainly active in Europe (22 FTE), currently rolling out US business.
2009
DE
n.a.
n.a.
2 Rounds
IBBCreathor Ventures
Context & Positioning
Extends the product portfolio through PaaS-enablement for hosters andtelecommunication companies (managed white-label platform).
Initially started with PHP language support in Q4 2010. The company becameone of few ‘polyglot’ player by supporting Java, Python, Ruby and NodeJSprogramming languages and others through the buildpack standard.
Offers a broad service base through it’s 3rd party add-on marketplace.
Billing and pricing service between cloud clients and cloud providers.
Approved supplier on the UK government G-cloud program.
Clients in the EU and the US and usually have £25-50k IaaS spend per month and commit for 6 months minimum with Cloud Options.
2010
UK
n.a.
n.a.
Undiscl.
Techstars
Context & Positioning Experts in cloud billing and price risk management, transferring expertise from the
physical commodities markets to cloud computing.
Their offering is effectively a cloud service “market maker” – helping users to buycloud services on terms that suit them, whilst buying from cloud providers on termsto suit the latter.
Through its financial service “Cloud Options”, Strategic Blue involves both the buyerand the seller in the price-setting process, not just the seller. Going forward thebusiness model will begin to mirror a traditional commodity hedging businessmodel of high volume and low transaction fee margins.
SaaS Cloud Management solution allowing multiple Cloud providers in a unified infrastructure.
Complete monitoring system.
Awared Best Solution 2013 by EuroCloud, at spannish level.
~20 FTEs
2012
SP
n.a.
n.a.
€200k
Ackstorm
Context & Positioning Offers easy management and control of different Cloud providers (Amazon,
Rackspace, Linode, etc.) from a single intuitive interface.
Powerful control tool capable of performing a complete monitoring of theoperation, and performing automatic maintenance actions such as increasingresources available, auto-scaling or restarting applications in case of incidents.
Clients include developers, IT managers, systems integrators and IaaS providers.
Key Figures Presentation
Founded:
Nationality:
Rev. 2011:
Rev. 2010:
Funding:
Investors:
Complete cloud business provider.
Offers public, private and hybrid clouds plus storage in own Data Centers or hosted worldwide on their network of cloud federation partners.
Operates multiple Data Centers in Berlin, Hamburg and Frankfurt am Main.
2009
DE
n.a.
n.a.
n.a.
Spin-Offfrom Internet Service
Provider Internet4You
Context & Positioning
IaaS providing self-service solution to user management, provisioning,automation services to offer a public, private or hybrid cloud solution.
Spin-Off from Germany-based Internet Service Provider Internet4You, whichalso offers managed hosting services and hybrid engineering solutions to buildtailored server solutions.
Selected European Players – Cloud Hosting Software
49
Key Figures Presentation
Founded:
Nationality:
Rev. 2012:
Rev. 2011:
Funding:
Investors:
Storage and scalable cloud hosting platform software provider.
Self-healing platform designedto automatically recover whenData Center hardware or software fail.
SETsquared member company.
11 FTEs.
2008
UK
n.a.
n.a.
$1m
DN Capital
Context & Positioning Helps user systems automatically recover from hardware & software failures
without loss of data and deal with spikes in traffic that traditionally lead to crashes.
Offers storage and hosting platform technology that automatically detects andrecovers from Data Center outages, delivers better density of customers per server,and offers end users the ability to self-recover lost files and data.
Key technology enabler is the use of containers as a lighter alternative to VMsenabling live migration across servers without the need of arduous/ enormous datareplication (as is the case with VMs).
Key Figures Presentation
Founded:
Nationality:
Rev. 2012:
Rev. 2011:
Funding:
Investors:
Collaborative work tool in SaaS mode dedicated file sharing and project management.
All-in-one solution for collaborative processes in business, Wimi streamlinesteamwork, allowing businesses to quickly and easily access shared documents,tasks and project calendars.
Seamless integration with today’s most popular productivity apps includingGoogle Apps, Outlook, Skype, Evernote, etc.
Automatic synchronization across all digital devices.
This document has been produced by Clipperton Finance (“Clipperton”) and is communicated to you solely for your information and should not beconstrued as a solicitation or offer to buy or sell any securities or related financial instruments.
This research paper is based on information available to the public and other sources deemed reliable, while every effort has been made to guaranteeexactitude and reliability, Clipperton Finance cannot be held responsible for omissions or errors. The information and analysis accessible in thispresentation speaks to industry trends in general, and should not be construed as providing any particular recommendations or analysis for any specificcompany that is mentioned in this presentation. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on,the fairness, accuracy or completeness of the information contained herein and, accordingly, none of Clipperton’s officers or employees accepts anyliability whatsoever arising directly or indirectly from the use of this document.
Clipperton Finance Limited is authorised and regulated by the Financial Services Authority. Registered No. 523695
This document has been produced by Clipperton Finance (“Clipperton”) and is communicated to you solely for your information and should not be construed as a solicitation or offer to buy or sell any securities or
related financial instruments. This research paper is based on information available to the public and other sources deemed reliable, while every effort has been made to guarantee exactitude and reliability,
Clipperton Finance cannot be held responsible for omissions or errors. The information and analysis accessible in this presentation speaks to industry trends in general, and should not be construed as providing
any particular recommendations or analysis for any specific company that is mentioned in this presentation. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed
on, the fairness, accuracy or completeness of the information contained herein and, accordingly, none of Clipperton’s officers or employees accepts any liability whatsoever arising directly or indirectly from the use
of this document.
Clipperton Finance Limited is authorised and regulated by the Financial Services Authority. Registered No. 523695
