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By Nick Wakeman

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Nick Wakeman

Cloud provider Carpathia to be acquired

Carpathia, a well-established cloud provider in the federal market, is being acquired for $326 million by QTS Realty Trust as that company tries to expand its technology platform.

QTS is based in Overland Park, Kan., and describes its strategy as the 3Cs – custom data center, colocation, and cloud and manage services. Carpathia will expand the colocation and cloud services QTS can offer, according to a company statement.

Carpathia brings with it several federal authorizations to operate (ATOs) with civilian and defense agencies as well as a provisional ATO from the FedRAMP joint authorization board.

QTS has had a federal presence for a few years, hiring John Lind in late 2013 as its vice president of federal sales. The company’s federal group is based in Reston, Va., and provides federal cloud services out of a data center located in Richmond, Va.

In 2014, QTS received FedRAMP compliance. The company markets its solution QTS Federal Cloud as an infrastructure as a service solution. Earlier this year, the company signed an agreement with Carahsoft to resell its cloud solutions through GSA Schedule 70.

The acquisition of Carpathia will accelerate QTS’ federal growth, the company said. In particular, Carpathia has an alliance with VMware through a branded offering known as VMware vCloud Government Service provided by Carpathia.

Carpathia's position in the federal market was one of the attractions of the company as an acquisition target, a QTS spokesman told me via email.

"The federal government is a dynamic and growing part of the data center industry," the spokesman said. Initiatives such as data center consolidation, cloud first and shared first make it an important growth area for QTS.

"These initiatives play particularly well with QTS’ 3C (custom data center, colocation and cloud and managed services) platform. The government is increasingly looking for more complex, highly complaint, highly secure solutions," the spokesman said.

The transaction will add 230 commercial and federal customers to QTS, bringing its customer base up to 1,000 in the United States and internationally.

Carpathia CEO Peter Weber will join the QTS executive team as chief product officer.

The deal is expected to close in the June timeframe.

QTS has been steadily growing in recent years. Revenue has gone from $120.2 million in 2010 to $217.8 million in 2014. Net income in 2014 was $15.1 million, compared to losses in 2013, 2012 and 2011. In 2010, the company’s net income was $14.4 million.

The company has 12 data centers in eight states and this likely will not be its last investment in the federal market.

"QTS has shown its commitment to the government space in many ways," the spokesman said. This includes spending the capital to buy and build out the data center in Richmond, investing in a government cloud and achieving FedRAMP compliance and now with the acquisition of Carpathia.

"It is fair to say that QTS has shown, and will continue to show, investment in the government space," the spokesman said.

Posted by Nick Wakeman on May 07, 2015 at 1:27 PM


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