Westcon-Comstor gains minority backer in General Atlantic

Westcon-Comstor has landed a fresh investment partner and lender after securing an agreement with General Atlantic to accelerate its growth potential.

The distributor has the backing of the global investor, which is taking a minority stake in the business.

Datatec continues to be the majority owner, ensuring stable leadership and strategy, but the introduction of General Atlantic will provide an opportunity to fuel further expansion of the distribution business.

General Atlantic will provide access to its global network of financial experts and be able to tap into that knowledge as it looks to enhance and expand its offerings.

David Grant, CEO at Westcon-Comstor, said the investment was an important moment in the evolution of the business and came on the back of seven years of consecutive growth.

“We are looking to the future from a position of strength, with strong fundamentals, a differentiated market proposition and consistent financial performance,” he said.

“The introduction of General Atlantic as both a financing partner and minority investor provides us with greater flexibility to accelerate our growth strategy, including expanding our portfolio and further strengthening our digital and AI capabilities,” he added.

Grant said the continuity in leadership that was maintained because of the minority investment was also a clear benefit.

“This structure ensures continuity. We retain the leadership stability and long-term strategic focus that have underpinned our success to date, while adding a partner with the scale and expertise to help us maintain our growth trajectory,” he said.

Jens Montanana, CEO at Datatec, said it had looked at several strategic options but chosen the one that meant the distributor could continue to follow its well-established and successful strategy.

“World-class management with one of the most experienced executive teams in the industry will continue to take the business forward while broadening the strategy,” he said. “Datatec, with 40 years of experience in this industry, will retain control while partnering with General Atlantic.”

He added that it would benefit from a relationship that meant the distribution business had access to both a financial backer and source of lending: “This partnership will provide capital as required to support exciting opportunities for expansion in our sector.”

Westcon-Comstor has built a strong reputation and been delivering decent financial results thanks to its focus in the robust security, networking and cloud markets.

Leo Wouters, managing director at General Atlantic, said it was aware of Datatec and the strength of Westcon-Comstor, and was backing the business for further growth.

“We believe our capital and strategic support can help to unlock compelling opportunities as Westcon-Comstor continues to build out its product portfolio and international presence,” he said.

In the distie’s most recent results, for the year ended 28 February, gross sales increased 9.6% year on year (YoY) to US $5.74bn compared with $5.24bn, gross profit improved by 13.1% to $499.2m, and gross margin was also up, by 25.8%, indicating the benefits of a portfolio increasingly centred around higher-value technologies

The distie has been pursuing a strategy of not only focusing on growth technology areas but in ensuring it is innovating in sharing data insights, with partners to drive opportunities and working with the likes of AWS to widen its route to market.