Digital Space acquired by Babble investor Graphite Capital

Deal marks exit for previous investor Horizon Capital which has owned the MSP since 2017

Digital Space has been acquired by private equity firm Graphite Capital as it looks to focus on organic growth and make "targeted" acquisitions.

The deal marks an exit for investor Horizon Capital which assumed ownership of the Digital Space business in 2017.

Based in London, Graphite is a mid-market investor with a portfolio that spans retail, industrial, financial services, healthcare, education and tech markets.

The firm backs companies with an enterprise value of between £30m and £175m.

It is an active investor in Babble, a comms-focused MSP that has acquired 21 busineses since 2019 and doubled its size this year to reach a revenue run-rate of close to £100m.

Digital Space CEO Neil Muller and his management team will continue to lead the business, with a focus on organic growth and "strategic" acquisitions.

The Fortinet, TalkTalk, BT Wholesale, 8x8 and AWS partner rebranded from Timico to Digital space in 2021 following a string of acquisitions.

The Digital Space business has transformed itself over the last four years from a reseller of broadband tariffs and fiber ethernet to SMB customers to a cloud-first provider for corporate and public sector clients.

Muller told CRN earlier this year that around 45 per cent of its annual revenues come from its so-called "Connected Space" business which includes SD-WAN, LAN and managed WiFi, while another 45 per cent comes from private cloud, public cloud and unified comms solutions. The remaining 10 per cent stems from security services.

Digital Space employs around 340 staff in offices across Newark-on-Trent, Telford and London.

Commenting on the acquisition by Graphite, Muller said: "We are delighted to be partnering with Graphite, who share our vision and ambition. In today's challenging economic times, we will continue to help our customers to reduce their costs and improve their productivity through digital transformation and robust (yet agile) secure, connected cloud managed services - with targeted acquisitions expected to support our quest."

"We thank Horizon Capital for their tremendous support over the last five years and look forward to working in partnership with Graphite."

Graphite senior partner Humphrey Baker added: "With strong demand for digital transformation and modern ICT services, Digital Space is very well positioned to capitalise on its strategy and integrated managed service capabilities. We are delighted to support Neil and his management team during the next phase of the company's exciting journey."