Managed M2M communications services provider KORE Wireless has announced that US private equity investment firms ABRY Partners has acquired a majority interest in KORE.
This investment, established in conjunction with the current KORE partners, will provide growth and acquisition capital that will allow KORE to further its goal of creating the pre-eminent independent provider of broad-based M2M service solutions on a global basis.
As the first step in its broader strategy, KORE also today announced the acquisition, in an all-cash transaction, of RacoWireless, the provider of IoT/M2M end-to-end connectivity solutions.
Following the completion of this transaction, the combined company will have offices in five countries and serve more than 3 million subscribers on behalf of over 1,500 customers using services in more than 110 markets around the world.
The combined organisation is primed to deliver, in short order, an unprecedented portfolio of connected technology, location-aware solutions, and management tools in a way that has never before been experienced in the industry. The acquisition is subject to completion of certain regulatory and other consents, and is expected to close in the fourth quarter of 2014.
“We are standing at a historic inflection point in our industry where scalability and innovation are critical, and the financial partnership with ABRY delivers the capital and expert support necessary to rapidly develop the scale demanded by global customers in what has so far been a fragmented market,” said Alex Brisbourne, CEO of KORE.
“Strategic acquisitions both in advanced connectivity and richer applications solutions are an important goal, as scale and global reach are of paramount importance to our large applications and enterprise customers. These customers seek to leverage new M2M technologies that enable more efficient, innovative, and in some cases, disruptive business models going forward,” he said.
“This acquisition is a great fit between two companies that have been pioneers in this space,” said John Horn, president of Raco who will become the executive VP and chief strategy officer. “This is a unique opportunity that will redefine the IoT/M2M industry, and create a company that has the right scale and focus to shape the course of the Internet of Things.”
“We are delighted to be moving rapidly with this first step in our expansion strategy, and create further value for our customers and partners both nationally and globally, leveraging the integrated solutions that the company can deliver for their businesses,” said Brisbourne.
The combined company’s increased scope and scale will provide customers and partners the benefits of a more diverse, global, footprint and access to an award-winning set of development and management tools.
Beecham Research comment on Raco acquisition
Robin Duke-Woolley, CEO at Beecham Research, commented: “The acquisition of RACO Wireless by KORE Wireless Group, announced today (11 November 2014), is significant within the M2M market. The combined business will rival many Mobile Network Operator M2M business units in terms of numbers of connections served. It is also clearly the start not the finish of a new growth phase for KORE.
“It was preceded by the purchase of a majority stake in KORE by the Boston-based private equity firm ABRY Partners. Although no numbers are mentioned in the press release, there is evidently plenty more firepower still available. Indeed, it was clear on KORE’s website a little while ago that the ABRY deal was done and they were waiting for the first acquisition before announcing it.
“One of the questions that frequently gets asked – particularly in Europe – is: ‘how can the independent M2M network providers exist competing against the MNOs?’ The thinking behind the question is that, since the MNOs are now very active in the M2M market, how can these network providers – who after all are buying their airtime from the same MNOs – hope to compete with them? The answer is ‘quite easily’.
“For a start, it does not necessarily suit MNOs to rely exclusively on their own direct sales to grow their M2M base. What is often forgotten is that most of these independent network providers have been working in the M2M market for a long time – often since before the term ‘M2M’ came into popular use and well before the MNOs started to take real interest in it.
“With that sort of experience you get to know exactly what customers need and you have also seen most of the possible challenges to making the solutions actually work in the field. What customers pay for is that experience and speed of response, plus the new support and platform services being introduced at regular intervals.
“Further than that, M2M solutions have always been essentially IP-based which means international in scope. Whereas MNOs are at heart country-based (or multi-country based if they have operations in several countries) and use roaming agreements to expand their coverage, the independent providers can go anywhere globally and organise local access with high speed links back to their platforms. Apart from cellular, that can include satellite as well as other forms of connectivity like WiFi and UNB. That’s not so easy for MNOs to emulate.
“The KORE-RACO deal will result in a combined business with an installed base of over 3 million M2M connections – in other words, more than many MNOs. It is certainly the case that ‘big customers want to deal with big suppliers’, so this deal will increase choice for large enterprise users – which in turn will aid overall market development and growth.
“This deal comes after cellular module vendor Telit introduced its own take on the M2M network provider market – their One Stop, One Shop primarily aimed at the OEMs they already sell their modules to.
“Then there is Wyless, originally a UK-based M2M network provider that has flourished in the US market and, with its acquisition in February this year of Aspider M2M, now looking to do the same in Europe. Other M2M network providers like Wireless Logic in UK have also been growing much faster than the overall market recently.
“The MNOs did not create the M2M market and will not have it all their own way – even for cellular connectivity. That is a good thing, for them and for the market,” concluded Duke-Woolley.