[Exclusive] 'Cloud Services Booming'... MBK Acquires Industry Leader Megazone's European Division

Now IB Capital Sells Existing Shares Worth 1.6 Billion KRW for 4.6 Billion KRW to Partially Recover Investment
MBK and IMM Make Separate Investments in Megazone at Six Times Higher Valuation than Now IB
Domestic Cloud Managed Service Provider (MSP) Market Size Exceeds 5 Trillion KRW

[Asia Economy Reporter Kwangho Lee] Now IB Capital, managing assets worth over 1 trillion KRW, has begun a partial exit (investment recovery) from Megazone Cloud, the No.1 cloud management service provider (MSP) in Korea. Now IB Capital was the first financial investor (FI) in Megazone Cloud. The total principal amount invested by Now IB in Megazone Cloud is 20.1 billion KRW.

According to the investment banking (IB) industry on the 19th, Now IB Capital recently sold some of its existing shares to MBK Partners and IMM Private Equity (PE). Now IB Capital sold existing shares worth 1.6 billion KRW and recovered 4.6 billion KRW. Although Now IB intended to hold long-term, it partially disposed of shares due to repeated requests from MBK Partners and IMM PE, who invested in the later stage, to sell existing shares.

Now IB Capital first became an FI by participating in Megazone Cloud’s Series A round in early 2019. Megazone Cloud’s Series A valuation reached around 400 billion KRW. Although the valuation was relatively high, they bet on the growth potential of the related market. They invested 20.1 billion KRW through the 200 billion KRW scale ‘Now Growth Capital Fund No.3,’ established in 2016.

Megazone Cloud’s corporate value continued to rise. In two Series B rounds held in December 2020 and June 2021, it was recognized with a corporate value of 600 billion KRW. Then, in the Series C round raised last September, the corporate value reached 2.4 trillion KRW, securing 450 billion KRW. The FIs who invested at this time were MBK Partners and IMM PE. These two companies invested in Megazone Cloud at a level six times higher than Now IB Capital.

The background behind two major domestic private equity funds simultaneously making large-scale investments and purchasing existing shares from the earlier-stage FI, Now IB Capital, is attributed to the growth potential of the cloud market. The industry expects the domestic cloud management service provider (MSP) market size to exceed 5 trillion KRW. Existing system integration (SI) companies such as Samsung SDS and LG CNS are also focusing on the MSP sector as a future growth engine.

Megazone Cloud was spun off in July 2018 from the cloud business division of its parent company, Megazone. Megazone Cloud has grown as an agency selling Amazon Web Services (AWS) products and services to domestic companies since signing Korea’s first partnership with Amazon in 2012. Currently, it has about 900 clients including Nexon, LG Electronics, and SK Planet.

An IB industry insider said, “Megazone Cloud’s growth potential is very large,” adding, “The related market size will continue to expand, and Megazone Cloud will not lose its No.1 position.” He further stated, “There is no need for early-stage investors in Megazone Cloud to rush an exit. Most FIs have a long-term holding atmosphere, so this recent existing share sale is an unusual case.”