Graphite Capital buys Digital Space from Horizon Capital

Wahida Ahmed
07 October 2022

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Mid-market sponsor Graphite Capital has agreed to acquire Digital Space, a UK-based managed IT services provider, from Horizon Capital.

Following the completion of the deal, CEO Neil Muller and his management team will continue to lead the business, according to a press release.

Humphrey Baker, senior partner at Graphite, told Unquote, management will reinvest with a minority stake. The sponsor is investing through Graphite Capital Partners IX, which held a final close of just over GBP 500m in November 2018, according to Baker.
Horizon appointed Oakley Advisory to run the sale of the IT services business, Mergermarket reported in May. The company was expected to be marketed off GBP 15m 2022 EBITDA, the report added.

Digital Space will have a strong focus on organic growth but will make a small number of complementary bolt-ons to meet customer demands for digital and managed services, Baker said. The company will target corporate clients that have around 500-5,000 staff and acquire companies that offer SD-WAN, cyber security or have a public cloud focus.

According to the press release, Digital Space will focus on areas including high-speed, hybrid cloud transformation, low-latency network connectivity; improved end-user experiences; workforce modernisation; and security services.

Horizon Capital acquired Digital Space in February 2017 with an initial investment of GBP 35m, according to the sponsor's website. Under firm's ownership, the business has completed three bolts-ons. Digital Space is one of Horizon Capital's 16 platform investments.

Graphite Capital Partners IX invests in UK-based mid-market businesses with enterprise values of GBP 30m-150m, according to Unquote Data. The sponsor remains focused in sectors including TMT, business services, healthcare and education, said Baker.

Company
Formerly known as Timico, Digital Space was founded in 2004 and rebranded in 2021. The company provides businesses with digital solutions to accelerate growth and improve operations. Headquartered in Newark-on-Trent, Nottinghamshire, it employs 350 staff and has an operational centre in Telford and an office in London.

People
Horizon Capital – Jeremy Hand (chairman).
Graphite Capital – Humphrey Baker (senior partner).
Digital Space – Neil Muller (CEO).

Advisers
Equity, Digital Space – Oakley Advisory (corporate finance); Pinsent Masons (legal).
Equity, Graphite Capital – Alantra (corporate finance); Travers Smith (legal); Deloitte (financial diligence); Armstrong (commercial due diligence); FRP Corporate Finance (debt advisory).