Bank of Scotland’s £60m backing for Iomart

bankOfScotlandLogoBank of Scotland has provided cloud computing and internet hosting business Iomart with a £60 million funding package to serve as an acquisitions war chest.

The Glasgow-based business, whose customers include online travel site Skyscanner, banking software firm Misys, the Joseph Rowntree Foundation and English National Ballet, said the money will allow it to continue its buy and build strategy as it seeks to expand across the UK.

Chief executive Angus MacSween has previously stated that the company is now having to target larger and more expensive popositions as it grows in size and Bank of Scotland has already provided a range of packages including a revolving credit facility worth £20m and a term loan to the value of £15m.

Since 2010 AIM-listed Iomart has made 12 acquisitions including the likes of Backup Technology, Melbourne, RapidSwitch, Redstation and Easyspace as it has expanded its presence across the UK.

The most recent deal, worth up to £12.5m, was for London based IT consultancy SystemsUp in a bid to boost Iomart’s capability in that area.

Mr MacSween said: “Our ambition is to be the market leader in the UK for cloud and managed hosting services including the growing opportunity to provide hybrid cloud.

“We will continue to look for well-positioned businesses that can give us the specialist skills and knowledge we need to achieve that, knowing we have the firepower to move quickly when the right opportunity arises.”

Last month Mr MacSween outlined his belief that Iomart, which employs around 380, can reach £100m in revenue within the next three years.

It recorded £65.8m in the 12 months to March 31 this year, an 18 per cent increase on the prior period. Pre-tax profits were up 11 per cent to £10.8m.

At that time Mr MacSween also confirmed that Iomart has a “pipeline” of acquisition targets.

Yesterday Richard Logan, finance director at Iomart, said: “An ambitious growth strategy needs strong financial foundations.

“The combination of this increased facility from the Bank of Scotland and our own operating cashflow gives us the liquidity to make further acquisitions.”

Andy Seaton, relationship director at Bank of Scotland, said: “There is a long standing relationship between Iomart and Bank of Scotland and we have been pleased to assist the business through a number of acquisitions in recent years, including the recent purchase of SystemsUp.

“We look forward to continuing to support the business’ future growth strategy and capital expenditure programme.”

As well as its UK operations, where it owns eight data centres, Iomart has customers in North America, the Far East, Middle East and Europe.

Mr MacSween has highlighted the potential for growth in North America but says the firm is focused on “slowly and carefully” expanded its presence there.

Last year Iomart was in advanced talks over a proposed takeover deal which valued the company at £320m but the deal collapsed in September.

London-based suitor Host Europe Holdings, backed by private equity firm Cinven, had made a number of approaches to the Iomart board.

Yesterday shares in Iomart closed up 0.75, or 0.3 per cent, at 244.25p.

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