London, 20 April 2011

LDC acquires majority stake in leading web hosting provider The UK2 Group

Deal underlines LDC’s commitment to the TMT sector
LDC, the leading mid-market private equity arm of Lloyds Banking Group, announces that it has acquired a majority stake in the UK2 Group, an international hosting company, for £47 million in partnership with its management team.

Established in 1997, the UK2 Group has evolved into a leading international provider of domain name registration and web-site hosting services to customers globally through multiple brands, from data centres in the UK and the US.

The Company has an industry-wide reputation for innovative hosting products. Through the VPS.NET brand it offers virtual private server Cloud hosting to the mass market and today is the fourth largest true public Cloud provider in the world. Through the 100TB brand, the company offers dedicated servers with market leading quantities of bandwidth.

LDC has acquired a majority stake in the company and will support management in expanding the portfolio of innovative hosting products and building on the Company’s position as the leading innovator in mass market hosting.

Phil Male, previously Chief Strategy Officer at Cable & Wireless Worldwide and Chief Operating Officer of Thus Group plc, joins the company as executive chairman. Working with the existing management, he will focus on driving the launch of new services and on growing the business organically and through acquisitions.

Outgoing CEO Ditlev Bredahl will transition management of the company to Phil Male and then devote his time solely to focus on his role as CEO of OnApp, which has developed the only Cloud deployment and management software designed specifically for the hosting industry.

Launched in July 2010 after two years of development, OnApp software already powers Clouds for some 200 hosting providers worldwide. OnApp will continue to be controlled by its existing shareholders.

This is LDC’s sixth deal of 2011 with £163 million already committed. The investment in the UK2 Group will further strengthen LDC’s existing TMT portfolio, which includes Avelo (previously 1st The Exchange), a market leading provider of technology solutions to the financial services sector, Easynet Global Services, a specialist B2B telecommunications operator and, the largest European purchaser and retailer of replay CDs, DVDs and Games.

Torch Partners acted as exclusive financial advisor to the Company on the transaction and Macfarlanes LLP acted as legal advisor to the Company and management. LDC was advised by Arma Partners and CMS Cameron McKenna LLP.

Daniel Sasaki, Managing Director, LDC London commented: “Our strategy is to invest through the cycle in great UK SMEs with exceptional management teams. The UK2 Group is an exciting company with great growth potential within a sector that is constantly innovating and expanding. We are very satisfied with our new partnership with the UK2 Group, which fits perfectly with our current strategy to invest up to £200 million in high-quality businesses in the TMT sector over the next 24 months.”

Phil Male, Executive Chairman, UK2 Group commented: “I’m delighted to be joining such an innovative organisation, and look forward to working with the existing management team to drive the company forward. The increasing demand for hosting services, as we all move to a more ‘Cloud’ based world, means that the UK2 Group is perfectly positioned to take advantage of, and innovate in, this fast growing sector.”

Ditlev Bredahl, CEO, OnApp commented: “The transaction marks an exciting new phase in the growth of the UK2 Group. LDC is the ideal institution to support the Company going forward and I wish Phil every success in his new role.”

For further information please contact:
Richard Evans/Lucy Grimble
The Communication Group plc