International private equity firm, Cinven has agreed to make a significant investment in Nitel, a next-generation technology services provider. Financial details of the transaction are not being disclosed.
Based in Chicago, Nitel is a provider of internet connectivity and networking technology services to multi-site small and medium-sized enterprises. The company has a robust portfolio of communications solutions and a modern platform which delivers reliable, high-performance services.
In addition to its managed access offering and interconnect services, Nitel provides high-quality software-defined wide area network (SD-WAN) solutions and associated managed cybersecurity offerings that improve application performance and simplify network management and enhance network visibility.
Founded in 2003, Nitel has grown to become a leading provider for companies that have shifted to cloud-based networks and need to prioritize connectivity-driven services to support multi-site networks.
Cinven’s Technology, Media and Telecom Sector team identified Nitel as an attractive investment, as a result of its:
- Attractive underlying market dynamics – Nitel operates in a large (more than $28 billion), growing total addressable market for managed internet connectivity services (at more than 8 percent per annum with specific segments such as SD-WAN growing at more than 20 percent), driven by increasing data and networking needs for companies. These needs are partially due to the shift to cloud-based SD-WAN, currently in the early stages, but expected to accelerate over the next few years.
- Opportunity to expand into incremental adjacent services – Alongside the SD-WAN potential, there is a compelling opportunity for Nitel to cross-sell new products and services (such as security) to its existing customer base.
- The buy and build potential – There are many competitors that provide offerings for SMEs with significant opportunity to provide greater value to customers through select future acquisitions by a market-leading platform like Nitel.
- Nitel’s strong growth track record – Founders Rick Stern and Ron Grason have built an outstanding business that consistently has delivered double-digit organic growth and strong cash conversion, supported by its high proportion of recurring revenues.
The transaction represents Cinven’s third majority investment in a founder-owned business in 2021.