Oak Hill Capital Acquires ViaWest

Oak Hill Capital Partners has entered into a definitive agreement to acquire managed hosting provider ViaWest from its current owners, led by Trinity Equity Investors, Goldman, Sachs & Co. and Quilvest. Oak Hill Capital, a leading private equity firm and longstanding investor in the data center industry, is investing in partnership with ViaWest’s current management team, led by Chairman and CEO Roy Dimoff. The terms of the transaction were not disclosed.

The deal is the latest in a series of deals in which private equity firms have acquired regional managed hosting companies. Denver-based ViaWest has expanded its data center footprint in the western U.S. through a series of acquisitions, and now operates 16 facilities in Colorado, Texas, Oregon, Utah, and Nevada. The company, which was founded in 1999 by Dimoff and Chief Operating Officer Nancy Phillips, has more than 1,000 customers.

“Explosive growth in Internet traffic and a growing preference by all but the largest corporations to outsource their own data centers is driving tremendous demand for high-quality, stand-alone data center solutions," said Bob Morse, a partner of Oak Hill Capital. "ViaWest is ideally positioned to serve this growing demand, and we look forward to supporting the company’s management team as they continue to build the franchise.”

Completion of the transaction, which is subject to regulatory approvals and customary closing conditions, is expected in the second quarter of 2010. Senior debt financing is being arranged by Royal Bank of Canada, and mezzanine financing is being provided by Barclays Structured Principal Investing Fund L.P. and Solar Capital Ltd.

"Over its 11-year history, ViaWest has evolved into a clear market leader,” said Dimoff. "With 17 acquisitions successfully completed, combined with a strong history of organic growth, our management team is eager to transition into our second phase of growth. We are extremely pleased that our new financial sponsor is Oak Hill Capital, a partner that fully understands the industry and the opportunity. Similar to our current investment group, Oak Hill Capital has a long-standing history in our industry and a tremendous reputation for successful investments based on their partnership with management.”

Oak Hill Capital has invested in a number of companies in the data center sector, including Savvis, The Telecity Group and Cincinnati Bell. Robert M. Bass is the lead investor in the private equity firm, which has more than $8.4 billion of committed capital.

Sengal Selassie, founder and Managing Partner of Trinity Equity Investors, said ViaWest had "built a tremendous reputation servicing mid-sized and Fortune 1000 companies’ infrastructure space needs, and we are very proud of the ViaWest franchise.”

RBC Daniels and Cowen and Company acted as financial advisors to ViaWest in the transaction. Winston & Strawn LLP is serving as legal counsel to the largest shareholders of ViaWest. Hogan & Hartson LLP is serving as legal counsel to ViaWest. Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to Oak Hill Capital Partners.