Dromana Estate (ASX: DMY) has landed investment from Melbourne based technology investment group Dominet Digital Corporation to cornerstone Dromana’s acquisition of Cloud Central.
Dominet subscribed in Tranche 2 of Dromana's placement to fund the acquisition of Cloud Central.
Notably, and a sign of expertise seeing the potential in Cloud Central, Dominet is headed by Domenic Carosa, who is also the Co-Founder of Australia’s only internet focused Pooled Development Fund, Future Capital Development Fund.
In addition, Domenic was co-founder and Group CEO of ASX-listed destra Corporation Ltd (ASX: DES), which was the largest independent media and entertainment company in Australia with revenues of over $100 million.
He has built a reputation as a leader in the Internet space by building one of Australia’s largest independent digital music websites, as well as Australia’s second largest web hosting and domain registration company, which he sold for
$25 million.
Cloud Central ticks the boxes for Carosa
Carosa commented: “Cloud Central meets all of our investment criteria as a scalable investment opportunity operating in a rapidly growing market. I’m glad that we have come to terms on our participation.
"As well as providing funding, we look forward to partnering Cloud Central on its expansion by adding strategic input, relationships and operational support."
The Australian cloud computing market is undergoing change, with businesses expected to spend $US3.4 billion (AUD$3.7 billion) on public cloud-computing services this year, a figure that will grow to $US5.3 billion by 2017.
Dromana appoints DJ Carmichael
Dromana has appointed DJ Carmichael as lead broker to the recently completed Tranche 2 placement and the Re-compliance prospectus to raise a minimum of AUD$3.5 million.
Cloud Central acquisition
Earlier this month, Dromana completed due diligence conditions for its acquisition of Cloud Central.
The acquisition will position Dromana in the fast growth sector, with Cloud Central already generating revenue from over 200 active customer accounts in Australia.
There is plenty of blue sky potential for the company, with Cloud Central seeing the market consisting of 15,000 or Australian ICT companies across segments.
Cloud Central has four cloud data presences located within Australian Tier-III secure data facilities with two in Canberra, and one each in Sydney and Melbourne.
Importantly there is excess capacity to grow revenue.
Its platforms and services are underpinned by strong intellectual property developed over four years, validated by live customer deployment and numerous Government grants and awards.
Consideration for the deal
Consideration is split between an initial issue of 275 million fully paid ordinary shares, and additional shares to be issued upon achievement of performance milestones linked to revenue and EBITDA.
Name change, re-compliance, board
Completion of the acquisition will result in a change of company name from Dromana Estate to CloudCentral Limited.
The acquisition will constitute a change in the nature and/or scale of the activities of Dromana in accordance with Chapters 1, 2 and 11 of the ASX Listing Rules.
Shareholder approval will also be required.
Dromana has also withdrawn its invitation to Andrew Milner to join the board at completion of the transaction, however his absence will be amply compensated by the addition of Domenic Carosa as a cornerstone investor.
Analysis
Dominet Digital Corporation's investment in Dromana is a major vote of confidence in the company's transformation into the cloud-sector, which is a game-changer for Dromana.
The acquisition delivers a company with existing revenue streams, and importantly scalability to grow in the rapidly expanding sector.
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