Cloud Superstar AST Sells Majority Stake To Tailwind Capital, Sets Sights On Becoming $1B Oracle Pure Play Powerhouse
AST Corp., an Oracle cloud superpower that is beating some of the biggest consulting companies in the world on high-profile deals, has sold a majority stake to New York private equity company Tailwind Capital.
Tailwind, which has had success in the technology services market, is set to provide financial and management muscle aimed at taking AST from a $100 million company with 500 employees to a $1 billion company. That would make AST the largest pure play Oracle cloud systems integrator in the world, said Pravin Kumar, the co-founder, and CEO of the Naperville, Ill. headquartered AST.
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"We are very excited," said Kumar. "We are already the top player for Oracle in public sector. We want to take that to the commercial sector and become the number one pure-play Oracle Red Stack systems integrator in the world. We have very aggressive growth plans. Our goal is to be a $1 billion company. Oracle plans to be the first cloud company to hit $10 billion – beating Salesforce to that mark. We want to capitalize on that and capture that growth with them."
The 21-year-old AST – an Oracle Platinum partner with more than 90 percent of its workforce cloud certified – has a good start to hit the $1 billion target. The company regularly competes against the likes of IBM, PWC, Deloitte, CSC, and Accenture for high profile engagements and wins big deals including a highly prized Oracle Cloud enterprise resource planning deal with the city of Detroit.
Kumar said the AST team is already hard at work eyeing potential acquisitions to expand its Oracle footprint. He expects AST to complete one or two acquisitions this year. "We are already evaluating companies to acquire," he said. "We have three on the radar that we are evaluating. We are moving into overdrive to keep up with the market opportunity. We are going to have everything Oracle has to offer. That is going to take some acquisitions."
The Tailwind investment comes with the Oracle cloud business ramping at a breakneck pace for AST – which is benefiting from its 100 percent focus on Oracle. "Oracle rules the world in the database market and SaaS (Software as a Service) market," said Kumar. "Everyone knows that. We want to take that infrastructure fight to the AWS turf. We want to be the top player working with Oracle in the cloud. A lot of companies are a mixed bag – they work with AWS and Azure and Oracle. We are the number one pure-play Oracle infrastructure cloud provider. We want to dominate that market like one else."
AST aims to take the same formula it used to make it one of the most admired Oracle solution providers in the world to become the largest pure play Oracle cloud infrastructure provider in the world.
"The secret for us is knowing the industries that we work in," said Kumar. "We don't try to be everything to everybody. We work in the top 12 industries with business analysts and industry experts that have been in those industries and spoke that language. They have been in those industries. That is what allows us to make a transformative business decision for them. This is not about implementing the latest gizmo. It is about transforming their business for the cloud. The way we do that is by knowing their business and blending in our Oracle expertise to get them to where they want to go."
Martin Wolf, president of martinwolf M&A Advisors of Walnut Creek, Calif., a top channel deal maker that advised AST on the deal, said he sees the deal as a game changer in the Oracle marketplace.
"AST competes and wins business in the same echelon as some of the largest, most diversified and financially secure companies in the world," said Wolf. "They have transitioned to the cloud and are extremely well positioned. The fact that their direct competitors are all behemoths and they succeed an incredible testament to AST's capabilities. We are very pleased with this deal."
Wolf said he expects AST – which has cloud muscle, international reach, and off-shoring capabilities – to continue to build out its Oracle cloud services business with the help of Tailwind. "I would expect Tailwind to look at this business either geographically or vertically and leverage those core strengths. Tailwind will be very effective in helping them grow. They have done this before."
Tailwind, for example, made an equity investment in a leading SAP consulting and staffing firm, Optimal Solutions Integration, Inc. in 2008, then arranged for up to $100 million in financing for the company. That deal culminated in the sale of Optimal three years ago to NTT Data, a subsidiary of Nippon Telegraph and Telephone Corp.
Kumar said having Tailwind as a partner in the next phase of the business is going to make all the difference in the world. He said the Tailwind deal took nine months from start to finish.
"It was a lot of late nights and hard work," he said. "We are excited to have pulled it off. Tailwind is a well-known name in the market that takes a long-term perspective on growing the business. We treat them as a partner in the business, not just an investor."