Lumison swallows DediPower Managed Hosting

Lumison has snapped up Reading-based cloud and co-lo player DediPower Managed Hosting for an undisclosed sum.

This is the second deal this year for private equity backed, managed services provider Lumison, run by former Computacenter director Mark Howling, after forking out £22m for data centre co-location outfit Blue Square Data in March.

Demand for IT infrastructure-as-a-service is on the rise as businesses seek to give employees a "scalable and flexible way of working", said Howling in a statement.

The acquisition takes Lumison's turnover to £27.5m, up from £6.4m three years ago, and pushes the staff headcount to 130.

Lumison, headquartered in Edinburgh, claims it operates eight data centres across the UK, hosting customers' online operations, biz apps and development environment.

DediPower Managed Hosting made strides in its last financial results for the year ending 30 September 2010, with an operating profit of £397,000 on revenues of £6.5m. Around 70 per cent of its sales were derived from managed services.

M&A activity in the fragmented IT managed services space is ramping as a number of firms try to build scale to target small and mid-sized customers.

Only last week private equity specialist Lyceum Capital splurged £30m on London-based mid-market managed services firm Adapt.

Veteran analyst Anthony Miller, managing director at TechMarketView, said in a note today that the SME infrastructure managed service market is "rampant with players and therefore ripe for consolidation".

"However I do not see any one player ever taking a dominant position as that’s just not how the IT services mid-market works in practice. But I do believe that the players with a better chance of success (indeed survival) will be those that climb well above ‘vanilla’ co-lo," he added. ®