Oakley Capital reaps 10x on Contabo exit to KKR

The exit will generate a gross return in excess of 10x money multiple and over 100% IRR to Oakley Capital, according to a press release. OCI, the listed investment vehicle that invests in the funds managed by Oakley Capital, will obtain proceeds of about GBP 59m from the sale, representing a premium of about 105% to the 31 March 2022 carrying value, an uplift of about 17 pence per share to the company's NAV.

The London-headquartered mid-market GP bought Contabo from founders in 2019 via Oakley Capital Private Equity Fund IV alongside hosting entrepreneurs Thomas Strohe, Jochen Berger, and Thomas Vollrath, who introduced the opportunity to Oakley. Backed by LPs across Europe, North America, and Asia, the fund held its final close at EUR 1.46bn in July 2019, above its EUR 1.2bn target.

It invests with tickets at least EUR 50m in high-growth mid-market companies in the consumer, education, and TMT sectors in Western Europe, according to Unquote Data. It considers investing up to 30% of the fund in other areas, such as North America, while no more than 20% of the fund will be invested in a single portfolio company.

As part of the transaction, Capital Fund V will reinvest in Contabo alongside KKR. The fund was registered in August 2021 and is expected to follow its predecessor's strategies, according to Unquote Data. OCI's indirect contribution via Fund V will be close to GBP 37m, with its liquid resources available for future deployment — including this transaction — estimated to be about GBP 178m, according to a press release.

KKR will invest in Contabo through its European private equity strategy, according to a press release from the firm.

Under Oakley's ownership, Contabo acquired Czech hosting business VSHosting in 2020 aiming to expand its international footprint, followed by GPORTAL in 2021, a rapidly growing platform-as-a-service provider in the gaming space.

The partnership with KKR and fresh investment from Oakley will support the next stage of Contabo's growth plan including acquisitions, according to a press release. The company is well-positioned in a market that has shown strong growth in recent years, driven by structural trends and market dynamics, including increasing data traffic, the ongoing digitisation of small businesses as well as the increasing use of Cloud applications.

Company
Contabo is a Cloud infrastructure and hosting provider based in Germany, offering SMEs, developers, prosumers, and gamers simple, easy-to-use Cloud services with a best-in-class price-performance proposition. With a global network of 24 data centres in Europe, the US, and Asia, the company is serving a diversified mix of more than 250,000 customers in different industries across approximately 150 countries.

People
Contabo − Thomas Noglik (CEO).
KKR − Jean-Pierre Saad (partner); Laura Schröder (director).
Oakley − Peter Dubens (managing partner).

Advisers
Vendor and Contabo − Arma Partners; DH Capital (corporate finance); Kirkland & Ellis (legal).

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