Publicly listed Webcentral is set to sell off its web and email hosting businesses for a total transaction value of $165 million.
The Melbourne-based IT provider has entered into binding agreements with a European investment group led by Oakley Capital to sell two-thirds of its Webcentral and Melbourne IT domain name registry, consumer hosting and email hosting services business by November.
As a result of the sale, Webcentral will change its name to 5G Networks Limited and continue carrying on its remaining businesses as a telecommunications carrier and owner of infrastructure servicing enterprise and wholesale customers.
According to a notice on the Australian Securities Exchange (ASX), Webcentral will use the $115-million sales cash to pursue “EBITDA- [earnings before interest, tax, depreciation and amortisation] accretive acquisitions” of complementary technology, cloud hosting and managed IT businesses and to “support future growth initiatives”.
As part of the deal, Oakley Capital will agree to purchase $12 million worth of cloud services and managed support from Webcentral over five years, with a $4 million minimum spend in the first year.
“Oakley and their partners combine a deep understanding of the domains and hosting sector with a proven value creation playbook,” said Joe Demase, Webcentral managing director. “The Oakley team is uniquely positioned to support the next stage of Webcentral’s growth, enabling us to expand our capabilities, further improve our services to clients, and pursue new growth opportunities internationally.”
New Domain Services was integrated with Webcentral’s Melbourne IT business with Jonathan Horne appointed as CEO of the unit to help drive growth in corporate domain services.
Webcentral’s financials have struggled over the last five years, with the company appearing on the brink of closure in February 2020.
However, the company has steadily reduced its losses, posting $22 million in the red at the end of 2023, an 8.7 per cent improvement year-on-year.
Webcentral previously merged with the business known as 5G Networks in July 2021 after being acquired by it in 2020. As such, this rebrand sees the business reverse its decision to stick with the Webcentral name after its merger.
The 5GN business owns and operates data centres, private cloud, fibre optic cables and provides managed IT services to 2,500 enterprise clients and 100 wholesale customers.