According to announcements issued Monday, private equity firms Warburg Pincus and Goldman Sachs Capital Partners will acquire a majority stake in web hosting giant Endurance International Group (www.enduranceinternational.com) from Accel-KKR, which will also retain a stake in the company.
The press release did not publish any specific details about the deal, however a Reuters report cited “a person familiar with the matter” as saying the company would change hands for about $1 billion.
One of the largest hosting providers in the world, Endurance International Group is no stranger to acquisitions. The company is one of the most active acquirers of mass-market hosting brands in the business.
While EIG tends to shy away from publicizing the full list of the brands it operates, but the Endurance International entry on the Better Business Bureau’s website lists 36 separate brands. The list may not be 100 percent accurate, as some brands might not still be in operation, and more recent acquisitions (such as Bluehost and Netfirms) may not be listed.
According to the press release announcing the sale, EIG serves more than 1.9 million unique customers, manages more than 7.7 million domains and delivers more than 5 million applications.
There’s no reason to expect that the acquisition of Endurance would interrupt the company’s own process of acquiring and managing additional hosting brands.
According to the Reuters report, the $1 billion valuation is about 7.5 times EBIDTA. The report also cited the same anonymous source as saying Warburg Pincus would own more than 50 percent of EIG following the transaction.
“During the past 15 years, Endurance has built a great business by catering to the online needs of small- and medium-sized businesses,” says Hari Ravichandran, the company’s founder and CEO, quoted in the announcement. “We are delighted to welcome Warburg Pincus and GS Capital Partners as our investors and appreciate their strong vote of confidence in our business model. We look forward to leveraging their deep technology expertise and strategic insight as we continue to innovate and grow in order to meet our customers’ continuously expanding needs.”
Accel-KKR, with more than $1.3 billion in assets under management, is one of the few private equity firms with a history of acquiring and selling hosting businesses over the years. It’s portfolio currently includes a stake in managed and cloud hosting provider Layered Tech.
The sale to GS and Warburg Pincus would seem to be part of a growing trend toward an increased visibility of the hosting business among more traditional investment banks.
“We believe there is an enormous opportunity to build on Endurance’s success,” said Jim Neary, managing director at Warburg Pincus, also quoted in the release. “We are excited about partnering with the Endurance management team as the Company continues its impressive growth trajectory.”