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Have integrators missed the boat?

Have integrators missed the boat?

Boatloads of refugees might see Australia as the land of promise, but one Australian-born network integrator is hoping the tide will flow the other way.

In the wake of Asian-based ING Baring's investment in NetStar, the company believes it now has the Asian network integration market to itself.

In Sydney recently, NetStar International's new president, K.H. Wun, said the Asian region is now witnessing healthy signs of growth.

"Asia is coming out of its recession already," he said.

One of the key drivers of future growth will be China's decision to join the World Trade Organisation, Wun claims, stating this market alone represents a huge opportunity.

On reflection, Wun said he could not think of any direct competitors the company will face in the company's chosen network integration services niche in the region.

"We are bullish about the opportunities in Asia as a market."

Baring Private Equity Partners' managing partner, Jean Salata, also visited Sydney to trumpet the deal and was equally optimistic about Asia's future potential.

"We think [NetStar] is well positioned for really strong growth," he said. "This is one of the few regional companies in this sector."

The investment house also views the company as a platform for future acquisitions. While Salata would not reveal specific companies of interest, he explained the company is adopting a "buy and build" strategy to achieve the growth necessary to meet its financial goals.

At this point, NetStar has revenues of $US70 million which is expected to double next year.

Management takeover

NetStar's private investment deal in November saw its management purchase the organisation from former parent Anixter with the help of the ING Group's new Baring Asia Private Equity fund. NetStar is also opening the investment offer to its staff.

The capital injection was reportedly the largest ever single investment by the $US300 million fund. The only point yet to be clarified is the actual investment amount. Executives refused to be drawn on specific figures, but said NetStar management contributed 10 per cent with ING Baring taking care of the remainder.

Salata said staff and management have the option to increase their stake in the company to around 15 per cent once further growth has been achieved.

Meanwhile, the company is also attempting to redefine its definition in the network integration space. NetStar Australia's managing director, Kent Brooks, believes the term "network application provider" fits the bill. Salata agreed, stating network integrators are trying to position them- selves as "interactive integrators", "e-commerce enablers" or "e-consultants".


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