NTT to acquire 74% in Netmagic Solutions

NTT Communications, the wholly-owned subsidiary of Nippon Telegraph and Telephone Corporation, has announced plans to acquire 74 per cent stake of Mumbai-based Netmagic Solutions, a provider of datacenter services in India. The acquisition is worth ¥10 billion ($128 million), according to media reports.

The proposed acquisition will see the exit of venture capital investors like Nexus Venture Partners, Nokia Growth Partners, Cisco Systems and Fidelity International.

The acquisition of 74 per cent of Netmagic for $128 million ( Rs 640 crore), values the company at Rs 800-860 crore. While it could not be confirmed on the premium that the investors made from their exit, NVP and Fidelity had invested Rs 80 crore jointly in early 2008. Again, in 2010, it raised Rs 70 crore in a round led by Nokia Growth Partners and Cisco Systems.

The addition of Netmagic Solutions’ datacentre services and sites will expand NTT Com’s capability to provide one-stop ICT solutions in the fast-growing Indian market, as well as accelerate its offering of globally seamless cloud services through expanded ICT infrastructure Asia-wide.

“It is a huge upside for us and NTT,” says Sharad Sanghi, Founder & CEO of Netmagic Solutions. “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 and leadership position in the managed IT hosting and cloud services market. I will continue to hold 26 per cent stake in the company.”

Netmagic Solutions currently operates seven datacenters in major Indian cities such as Mumbai, Chennai, Noida (Delhi-NCR) and Bangalore. It provides services such as colocation and managed hosting to more than 1,000 customers, as well as ISP and cloud services to many other customers.

“This acquisition enhances our global status as the ICT partner of choice (including now in India), one of the key areas of our future growth,” says Katsumi Nakata, senior vice-president of NTT Communications. “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.”

With this acquisition, NTT yet again increases its India footprint. Last year, NTT Data Corp acquired Hyderabad-based Intelligroup Inc for $200 million (Rs 1,000 crore).

It also held talks to acquire the Indian IT services firm Patni Computer Systems, but the deal could not go through. Eventually Patni was acquired by Nasdaq listed iGate and PE Apax for $1.2 billion.