Littlejohn-, Pamlico-backed cloud-software company is said to seek add-ons

A new cloud-services-software company backed by Pamlico Capital and Littlejohn & Co sees opportunities to grow via add-ons in a consolidating market, a source told Buyouts.

Littlejohn-backed Hostway and Pamlico-backed Hosting said Jan. 8 they’d merge the companies, creating a multiproduct global software business.

The new company – it’s mulling naming ideas from customers and staffers – will be growing through M&A once the integration is complete, within a year, the source told Buyouts.

The new entity will target companies that add location, skills and product scale. These include businesses focused on fintech and healthcare, specifically development and operations, and potentially some of its current customers, the source said.

“When you’re trying to provide services on top of Amazon’s [Amazon Web Services] and Microsoft’s Azure, you need scale,” the source said.

Both Hostway and Hosting deliver managed cloud and cloud-infrastructure services, complementing each other in regional coverage and product lineups, said CEO Emil Sayegh, who previously was CEO of Hostway.

“The products sets are so complementary that if you put them together, it’s like combining missing pieces of the puzzle,” he said.

“Before, Hosting was only in the U.S., and Hostway also didn’t have that large coverage. However, Hosting had a unified cloud solution on the AWS and Azure cloud platforms.”

Littlejohn and Pamlico will hold the new company 50-50. Blue Torch Capital, Prudential Financial, Garrison Investment Group and Main Street Capital provided debt financing for the deal.

Pamlico in November 2007 initially invested in Hosting as Wachovia Capital Partners, a part of Wells Fargo. Wachovia Capital adopted the Pamlico name in 2010.

In November 2018, Hosting sold Stelligent, a technology-services provider specializing in DevOps automation on AWS. Hosting acquired Stelligent in March 2017.

The new company’s management team will maintain a significant presence in Austin and Denver. A few members of the executive team and potentially some other employees will leave the company post-merger, the source familiar said.

Joel Daly and Rick Moore, Hosting’s CEO and CFO respectively, will help with the merger and then step down. Daly confirmed he would stay on as an adviser to the transition and continue as an investor in the company.

Action Item: Contact Pamlico here: contactus@pamlicocapital.com.