INetU To Extend Managed Hosting Footprint Through BV Investment Partners' Cash Infusion


INetU, an Allentown, Pennsylvania-based managed service provider, has completed a recapitalization initiative in partnership with BV Investment Partners, a private equity firm focused on mid-market products and services. Though the size of the investment has not been disclosed, the transaction makes BV the majority shareholder at INetU and will allow INetU to expand its operations.

"This is been a profitable managed hosting company for well over a decade," said David Van Allen, vice president of sales and marketing at INetU. "We have experienced solid growth, despite the fact that we've done it by ourselves. We are one of those classic bootstrap companies that have always had great customer list with low churn. But, it became clear that if we wanted to compete on a larger scale, additional funding would be necessary. So the investment from BV is going to enable that."

INetU specializes in cloud-centric services for small to medium-size enterprises in which technology and their Internet Web presence are mission critical. According to Van Allen, the vertical sweet spot focuses on compliance, most notably e-commerce, PCI, DSS, financial services, government and education, healthcare and generally any sector regulated through HIPAA, HITECH and Sarbanes-Oxley.

[Related: The 10 Biggest Managed Services Stories Of 2012]

"We are going to use this funding to accelerate our normal growth plans and to have more points of presence," Van Allen explained. "We are going to start off with a new Seattle, Washington, location early this year, which will supplement our existing data centers in Ashburn, Virginia, and Amsterdam in the Netherlands. We're also going to continue to expand our cloud-based security offerings. Those are the two main areas of focus for 2013.

"There is a bifurcation among managed service providers," Van Allen continued. "One is a transactional path that focuses on trading capex for an opex and leverages the financial efficiencies of the cloud. That certainly is a high-growth area in our industry. But, the other path focuses on a strategy where the managed service provider assists the customer not just with the technology but also on how that technology can be leveraged towards higher business opportunities. That is where we excel. It is a great ROI story for our clients, as evidenced by our very low churn rate and our longevity in business."

Dev Chanchani will continue as President and CEO and will remain a significant shareholder in the company. Louis V. Bertocci and Matthew J. Kinsey, two executives at BV, will join the INetU board of directors.

The move marks the eighth private equity fund investment by BV, which since its founding in 1983 has invested more than $2.6 billion in 80 companies, mostly in the information and business services and communications industries.

PUBLISHED JAN. 8, 2013