OVH, a French independently-owned family business unicorn and one of the largest web hosting providers in Europe and globally, said it raised €250 million from New York-based private equity firms KKR & Co (NYSE: KKR) and TowerBrook Capital Partners, valuing the company at over €1 billion.
OVH is an Internet Service Provider (ISP) offering dedicated servers, shared and cloud hosting, domain registration, and VOIP telephony services. The company is a simplified joint-stock company under French law, owned by the Klaba family, and is headquartered in Roubaix, northern France.
Prior to this deal, OVH did not belong to any outside investment group. “OVH.com simply belongs to the Klaba family, the founders of the company. Four Klabas, namely Henry, Haline, Octave and Miroslaw, created OVH.com in 1999 with 50,000 francs and have worked everyday since,” said Octave Klaba, co-founder, chairman and CTO of OVH, and the man at the heart of its business.
“We looked for partners who will help us exceed €1 billion in turnover in four to five years, and we believe we have found them,” said Klaba. The company reportedly generated revenue of €250 million in 2015.
KKR, founded in 1976 and headquartered in New York City, is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. As of December 31, 2015, the firm had $120 billion in assets under management.
TowerBrook, headquartered in New York, and with offices in London and Munich, focuses on making investments in European and North American companies. The firm was founded in 2005 as a successor of Soros Private Equity, and is led by Neil Moszkowski and Ramez Sousou, TowerBrook founders and co-CEOs. They both previously served as co-heads of Soros Private Equity Partners and members of the management committee of Soros Fund Management LLC, and previously worked at Goldman Sachs & Co.
This is a new step in the development of OVH, which hitherto favored debt to finance its operations. The new equity funding from KKR and Towerbrook will allow it to grow in the US.
“We’ve grown in leaps and bounds over our 16 years of existence. We now host more than 3,700,000 domain names and 220,000 servers for the 930,000+ users throughout the world who put their trust in us. We’re also proud to have one of the biggest datacenters in the world: our BHS datacenter in Canada that houses 350,000+ servers.” — OVH
“The OVH group will remain a French company, and our head office is still in Roubaix,” said Klaba. “We are not changing the recipe which made us successful in the first place, but we do want to accelerate our growth.”
To expand internationally, OVH announced the launch of an €800 million fundraising campaign, to allow the company to open 10 new datacenters throughout the world, besides its 16 existing datacenters. It has several sites in Europe, Singapore, Australia and North America.
ASTOUNDING RISE OF A MODEST FAMILY BUSINESS TO THE GLOBAL CAPITAL MARKETS
Since being founded in 1999 by Octave Klaba and his family while he was attending the Jesuit ICAM School of Engineering in Lille, France, OVH has become “an established partner for hundreds of thousands of professionals worldwide,” it says.
“We do not come from a wealthy family from generation to generation, but a family of miners from Northern France (Pas-de-Calais) who emigrated to Poland in 1947 and then returned to France, still poor in 1990.” — Octave Klaba
In 2001, OVH rented 7 racks from Paris hosting provider Claranet, then moved to a datacenter abandoned by Free, a French ISP. Shortly after, the server park reportedly grew to 1,200 machines.
In 2002, OVH began renting another datacenter, also owned by Free, later purchasing the property, making it the first company-owned datacenter in Paris.
In 2006, OVH opened its first subsidiaries in Poland, Senegal and Spain.
The volume of activity grew exponentially from 6,000 to 12,000 servers. Between 2007 and 2009 OVH found a location in Roubaix, France, where it established its headquarters, and technology team, building Roubaix 1 (RBX-1), its very first datacenter, soon followed by RBX-2 and RBX-3.
Meanwhile, the company’s datacenters reportedly multiplied abroad, in Tunisia, Morocco, the United-Kingdom, Ireland, Italy, Germany, Finland, Portugal, and the Netherlands, with a total of fifteen sites in Europe and two in North Africa.
In 2010, WikiLeaks reportedly selected OVH as its web hosting provider following Amazon’s refusal to host it. The controversy prompted former French Minister of Industry Eric Besson to seek legal ways to block WikiLeaks’ web hosting in France, but his efforts failed.
Since 2010, OVH is said to have invested €10 million in cloud computing services. In late 2010, OVH launched “Dedicated Cloud,” a new external cloud solution. The company is now able to deploy a virtual datacenter within an hour and to add resources as needed, it says.
By 2011, OVH reportedly hosted 100,000 servers at its datacenters. The company built a 100% air conditioning-free datacenter (RBX-4), the first of its kind. A year later OVH built its first container-type datacenter in Strasbourg (SBG-1) to respond to the needs of its Eastern European clients.
In January 2012, Henryk and Octave Klaba, along with Canadian institutional partners, the city of Beauharnois, the Center for Local Development (CLD) Beauharnois-Salaberry, and Montreal International, officially established OVH in the Beauharnois-Salaberry Regional County Municipality of southwestern Quebec, Canada. Located in a renovated aluminium plant formerly owned by Rio Tinto Alcan, the BHS datacenter opened in January 2013, south of Montreal. Within 6 months, OVH teams built two towers hosting 10,000 servers each. A third hosting space of the same capacity was built in 2014.
Designed for the North-American market, as of 2015, OVH’s BHS datacenter has an overall capacity of 360,000 servers, and is powered by hydropower.
In 2013, OVH reportedly had 700 employees and launched a datacenter with an overall capacity of 300,000 servers in Gravelines, northern France. It also launched a VDSL Internet connection, opened new offices in Brest (Bretagne), raised a $140 million syndicated loan to support its investments, and participated with Atos in the “Cloud Plan” initiated by the French government. 2013 also marked the year of the first OVH Summit, an annual event inspired by IT events in North America.
In 2014, OVH celebrated its 15th anniversary, with 800 employees and hosted 180,000 servers in 17 datacenters. The same year, the company launched .ovh, a new generic top-level domain (gTLD). .ovh was the first new French gTLD to be opened to the general public and over 50,000 new domain names were registered within the first five days of a promotion campaign for the launch.
New brands have since been launched by OVH, ‘So You Start,’ offering servers and dedicated infrastructure, and ‘RunAbove,’ a high performance public cloud solution, as well as its ‘Kimsufi’ and ‘hubiC’ brands, which also serve as labs where users can test new applications.
In January 2015, as part of a strategy to become “a global reference for Digital as a Service,” the French company appointed Laurent Allard as its new CEO, while Octave Klaba became its chairman and CTO.
“OVH is one of the most exciting entrepreneurial adventures around, and I’m particularly proud to have been chosen to take the company even further forward,” said Allard, who previously served as CTO at CGI Group, and CIO at Logica and AXA Technology Services.
Significant investments in the development of its data centers and network infrastructure, the launch of offices in North America, and a sustained recruitment policy in France and the rest of Europe, have made it possible for the company to become well-known on the world market.
COMPETITIVE LANDSCAPE: THE MARKET FOR DATA CENTERS AND INTERNET SERVICE PROVIDERS
According to newly launched Australian market research firm CloudScene, which says it provides a comprehensive database of more than 4,700 datacenters and 4,200 service providers across 110 countries, OVH was ranked No. 105 among the world’s largest ISPs, with 28 PoPs (points of presence) and 11 datacenters.
In comparison, the world’s No. 1 ISP, Cogent, has 536 PoPs, and 49 datacenters. Other giant service providers among the top 10, competing with upstart OVH, include Level 3, Verizon, Zayo, AT&T, CenturyLink, XO, euNetworks, and Comcast.
CloudScene was launched this week by Australian technology entrepreneur, Bevan Slattery, founder of NextDC and Megapor, who said, the aim of CloudScene is to improve industry transparency and consolidate the currently fragmented cloud market. Digital Realty, Telstra, VentraIP, Megaport, Vocus Communications, Superloop, and NextDC are said to be among some of the service providers already actively using CloudScene.
The market research firm says it invested in an “in-house product development team and Australian-based data analysts to undertake the research, analysis and verification work.” CloudScene COO Jason Bingham added that the primary goal of CloudScene is to deliver reliable and accurate data to market. Nevertheless, the accuracy of the data could not be independently verified.
“The Asia-Pacific region is predicted to overtake North America as the largest generator of cloud traffic in the world, and Hong Kong and Singapore have become the established hubs for datacentres and international submarine cable capacity in the region,” said Bevan, according to ZDNet.
2016 ILLUSTRATES LONG-PREDICTED CONVERGENCE OF CLOUD AND HOSTING
M&A activity in the European cloud, hosting and managed infrastructure space is accelerating with a number of deals currently in the works across the continent, reported TMT Finance. Several datacenter, cloud and hosting deals have recently been announced and a number of smaller ones are currently taking place.
Next-generation convergence is the future of cloud and data center,according to Data Center Knowledge. “As cloud computing becomes the dominant form of IT, it exerts a greater and greater influence on the industry, from infrastructure and business strategy to design and location. Webscale giants like Google, Amazon, and Facebook have perfected the art and science of cloud data centers. The next wave is bringing the cloud data center to enterprise IT… or the other way around!” DCK says.
According to Gartner, 2016 will be a defining year as private cloud begins to give way to hybrid cloud. As HostingCon Global 2016 wrapped up its event in New Orleans the last week of July, “there has been a noticeable shift in the hosting market, and HostingCon reflected those changes,” said Jeremy Snyder, a hosting and cloud computing industry expert. 2016 illustrates the long-predicted convergence of cloud and hosting, according to Snyder, a DivvyCloud blogger and frequent HostingCon speaker, as shown in the chart below.
New Q2 data from Synergy Research Group shows that Amazon Web Services (AWS), Microsoft, IBM and Google combined control well over half of the worldwide cloud infrastructure service market. They also continue to grow more rapidly than their smaller competitors. In aggregate the big four grew their cloud infrastructure service revenues 68% in Q2, while the next 20 largest cloud providers grew by 41% and all other smaller providers grew by 27%. The market as a whole grew by 51%.
Amazon remains in a league of its own, almost three times the size of its nearest competitor and with a clear lead in all major regions and most segments of the market. Meanwhile Microsoft and Google can point to substantially higher growth rates, while IBM continues to feature strongly thanks primarily to its leadership in the hosted private cloud segment.
Second tier operators, including Salesforce, Rackspace, Oracle, NTT, Fujitsu, Alibaba and Hewlett Packard Enterprise, are either niche players, generalist IT service providers, or companies lacking the scale, focus and investment capabilities required to truly challenge the top four hyper-scale cloud providers, according to Synergy.
Photo: (L-R) The Klaba family: Haline, Henry, Octave and Miroslaw, Co-Founders and Owners of OVH.