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FIPB Approves NTT’s Acquisition Of 74% Stake In Datacenter Co Netmagic

The Foreign Investment Promotion Board (FIPB) has approved, Netmagic‘s proposal to increase foreign equity from 49% to 74%, and for the induction of a new foreign collaborator, NTT, to carry out the business of an ISP with gateways. This implies that Japanese telecom giant NTT, will now have a 74% stake in Netmagic. The FIPB media release mentions that the FDI inflow in the transaction was Rs 182.80 crore. So it’s likely that NTT paid the same amount for the stake in Netmagic.

NTT had said that the acquisition will help the company to focus on business-to-business solutions, including its plan to provide global end-to-end cloud services. Netmagic also holds a class A ISP license, so NTT will also be able to offer internet services through the company.

In an interview with The Web Host Industry Review, NTT America senior director, corporate marketing communications Christopher Davis, had said that following the acquisition, NTT Com will be able to meet demand from its Japanese and global clients to provide ICT infrastructure services in India.  He said that Netmagic will have access not only to leading Japanese companies present in India but also to NTT Com Group’s client base of multinational corporations, throughout various geographies and verticals. He had also mentioned that the current team at Netmagic would continue to work for the company.

Following the approval of the acquisition, Sharad Sanghi will remain the CEO of Netmagic, as indicated by the company, in a previous media release.

The FIPB had earlier deferred Netmagic’s proposal in April 2012. The approval had been pending for more than one and a half years. Netmagic had raised $16M From Nokia Growth Partners and Cisco in 2010, and Rs 80 crore from Fidelty and Nexus Venture Partners in 2008.

Netmagic is a managed IT services provider specializing in Internet Data Centers, Managed Hosting, Managed Security, Cloud Computing, and Application Hosting, among others. Netmagic has 7 datacenters located in Mumbai, Bangalore, Noida (Delhi-NCR) and Chennai, and claims to have 1000 customers servicing financial services, telecom, online media, online trading, travel and manufacturing companies, including clients such as Novatium, Apar, RockeTalk, Indian Infoline, Mobile2Win, InMobi, among others.

NTT also has significant stake in Indian telecom operator Tata Teleservices, which provides GSM mobile services as Tata Docomo. However, the NTT is yet to launch any consumer facing services in India

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