Tuesday, March 30, 2010

Web Host Hostway Raises $110m in Debt and Equity Financing

Web hosting and cloud hosting services provider Hostway Corporation (www.hostway.com) has closed a $110 million debt and equity financing deal with a consortium of investors to support its continued growth plan.

Led by Veronis Suhler Stevenson (www.vss.com) along with Fortress Capital, Regiment Capital and Phoenix Life, the transaction is meant to position Hostway as the leading provider in the quickly growing online services market. Hostway's current service offerings range from small business web hosting solutions to managed dedicated server hosting for medium to large enterprises. Additionally, the company offers cloud hosting offerings it launched last year.

"Since our founding in 1998, we have continuously sought ways to deliver more value to our customers by investing in our people, technology and infrastructure," Hostway Corporation chief executive officer and co-founder Lucas Roh said in a statement. "As a result, we have built a solid platform for growth. In the next stage of our history, in partnership with our new investors, we aim to accelerate the pace of becoming the leading provider in the fast-growing online services market."

Hostway is known for its SerivcePlex, its online service delivery portal designed to enable a seamless customer experience. Hostway has also partnered with telecom companies, cable operators and large retailers to deliver fully private-labeled online services to their customers.

George Cole, a partner at VSS's Structured Capital Funds division, said the company is excited to partner with Hostway and invest in a "vibrant and growing industry." He said, "With a sound infrastructure in place and forecasted growth far exceeding projected GDP growth annually in the managed hosting, collocation and cloud computing segments over the next three years, Hostway is well positioned to capture further market share."

International investment bank Houlihan Lokey (www.hlhz.com) served as the exclusive financial advisor to Hostway. "We are excited that our financing process yielded a sophisticated group of financial partners that will add value during the next growth phase for Hostway," said Chris Wilson, managing director and head of the Houlihan Lokey Media & Telecom Group.

This sort of investment simultaneously serves as a vote of confidence for a company's business model and furthers their prospects for continued growth. Last week, on-demand virtual data center and hosting services provider SoftLayer Technologies, Inc. (www.softlayer.com) was given $10 million in new investment, which will be used to fund the company's continued growth. Also last week, remote access, KVM, and digital signage solutions developer Minicom Advanced Systems (www.minicom.com) raised $6 million in financing, helping it spin out its digital signage division, Minicom Digital Signage (www.minicomdigitalsignage.com).