NTT Com To Acquire 74% In Netmagic Solutions; Nexus, Fidelity Exit

NTT Communications Corporation (NTT Com), a wholly owned subsidiary of Nippon Telegraph and Telephone (NTT) Corporation, will acquire 74 per cent stake in data services firm Netmagic Solutions Pvt Ltd, the companies have jointly announced on Wednesday. According to Telecompaper, the acquisition price is around 10 billion Japanese yen (around $128 million).

The addition of Netmagic Solutions' datacentre services and sites will expand NTT Com's capability to provide one-stop ICT solutions in the Indian market and also accelerate its global offering of seamless Cloud services.

Meanwhile, Nexus Venture Partners and Fidelity International (both lead investors in Netmagic Solutions), along with Nokia Growth Partners and Cisco Systems, have announced their exits from the company. Sharad Sanghi, founder & CEO of Netmagic Solutions will now hold the remaining 26 per cent stake and continue to hold his position as CEO.

Established in 1998, Netmagic Solutions currently operates seven datacentres in cities like Mumbai, Chennai, Noida (Delhi-NCR) and Bangalore. It employs around 500 people and provides services such as colocation and managed hosting (to more than 1,000 customers), as well as ISP and Cloud services.

The firm raised $10 million each from Nexus and Fidelity in a $20 million round in early 2008. Again in 2010, it raised Rs 70 crore in a round led by Nokia Growth Partners and Cisco Systems. Fidelity International and Nexus Venture Partners also participated in that round.

This is the fifth significant exit in 18 months for Nexus. In 2010, Nexus made an exit when Naspers acquired OLX and also exited web collaboration company Dimdim when Salesforce acquired it. Last year, Nexus made the same move when Citrix acquired Cloud.com for $200-250 million. And finally, there was another exit for Nexus when Red Hat bought Gluster for $136 million.

"This alliance will help Netmagic to leverage NTT Com's global network and datacentre footprint for customers. The partnership will also help us strengthen our growth plans in the Indian sub-continent and globally while NTT Com's global customers in India can benefit from Netmagic's expertise," said Sanghi of Netmagic.

NTT Communications provides a broad range of global networks, management solutions and ICT services to customers worldwide. It is a wholly owned subsidiary of Nippon Telegraph and Telephone Corporation, one of the world's largest telecoms with listings on Tokyo, London and New York stock exchanges. Going forward, the NTT Com Group is aiming to achieve global sales revenues of at least 1.5 trillion yen (around $19.24 billion), including a doubling of ex-Japan sales revenues, by 2015.

"By leveraging the complementary strengths of both companies, together with the continued leadership of Sharad Sanghi as CEO of Netmagic, we will accelerate enhancement of our global Cloud services for the provision of high quality ICT services. Also, India is one of the key areas of our future growth," said Katsumi Nakata, senior vice-president of NTT Communications.