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DWS demerges from Daisy with Inflexion investment

Channel comms player starts a fresh chapter with private equity player taking a significant minority stake in the business

Daisy Wholesale Services (DWS) has confirmed it has formed a strategic partnership with private equity player Inflexion.

Speculation had been building over the past week that the two firms would get to this point and Inflexion would take a significant minority stake that would value DWS at £1bn. Although the terms of the relationship were not disclosed, Inflexion has a track record of typically investing £10m to £300m of equity in its deals.

Inflexion is getting involved with a business that specialises in comms and cloud solutions, offering mobile, software as a service (SaaS), broadband, Ethernet and hosted voice, which already has relationships with all the household names in the comms world, including Vodafone, O2, BT/EE, Microsoft, TTB and Virgin Media Business, selling into an established network of more than 6,000 partners.

As a result of the transaction, DWS will demerge from Daisy Group and give the channel comms business a chance to flex its muscles with a fresh backer.

Matt Riley, founder of Daisy Group, who will remain as chairman of DWS, said the organisation had made the demerger decision to make the business structure clearer.

“In a fast-moving, dynamic, highly competitive market, with customers demanding more from their partners, we made a strategic decision to separate our direct and indirect businesses to provide better focus and agility,” he said. “The change has reignited the growth in all our businesses and today’s announcement is the next step on that journey.”

Terry O’Brien, CEO of DWS, will remain in that role, along with the rest of the existing management team, and they will be tasked with growing the business, which works with the channel to target the small and medium-sized enterprise (SME) customer base.

“The announcement today is brilliant news for DWS, brilliant news for our vendors and, most importantly, brilliant news for our partners,” he said. “From the get-go, it was clear that Inflexion shared our excitement about the UK channel community and the huge potential for growth as SMEs increase their investment in digital technology.”

Private equity investment often provides an opportunity for both organic growth and the funds to strike out with some acquisitions and Simon Turner, managing partner of Inflexion, indicated that would be the strategy with DWS.

“DWS is exceptionally well placed to continue its organic and acquisition-led growth as it builds its market position further,” he said.

DWS made its most recent acquisition, of unified comms specialist Giacom, just two months ago in November, as it looked to add more services and SME customers.

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