CSF could be the exception that proves the rule
17th March 2010, Megabuyte Newswire
Following on from Promethean’s successful IPO (although the shares have got off to a fairly limp start), the latest tech company looking to float is CSF Group, a Malaysian-based provider of data centre services. The company has two business lines: build and fit-out consultancy for companies constructing their own internal data centre facilities; and its own co-location business, based on three data centres totalling 201,000ft2 in Malaysia’s ‘Silicon valley’ – Cyberjaya. The company is looking to raise up to £28m at an indicative £57m pre-money valuation, primarily to help fund a fourth data centre, which will take its space to 407,000 ft2. The company has a strong position in Malaysia, with a third of the market and blue chip clients (eg it hosts the Asian hub for a major internet search provider (Errr, wonder who that could be?)), with plenty of growth prospects both in Malaysia and neighbouring countries, and from our discussions with the founder Adrian Yong, seems a solid business.
Regular readers will know that we are not fans, in general, of foreign companies listing in the UK but CSF could be the exception that proves the rule. London actually looks like a sensibly place for CSF to list given the relative size of the business and the fact that investors here have a good understanding of hosting businesses. Confidence of further boosted by the involvement of Phil Cartmell (former CEO of Vega, and currently a NED withTrafficmaster and CEO at Corac) as Chairman. An indicative market cap of £85m would put CSF on about 10x 2010/11 PAT, compared with Telecity’s 19-20x; an appropriate discount in our view to account for CSF’s earlier stage of development, exposure to less valuable consulting revenues, and emerging markets risk.