About Relax Internet
In 2010 Relax Internet sold its global internet hosting business to the VMC group companies. Relax Internet today still remains one of the largest online hosting services businesses in the UK and Europe.
“We took the decision to work with VMC because not only did they deliver on price, but they took the time to understand our business and its needs for them and for us.”
CEO of Technology, Relax Internet
What did Relax Internet want to achieve?
The challenge for Relax Internet after the agreed purchase of VMware’s vBlock system was to build the necessary IT platform while still performing its daily functions, including transfer of IT infrastructure, to operate the Streamlined VPS and vCloud businesses independently of other hardwired services. This required Relax Internet to invest in new IT infrastructure to support high end application processing for current clients and partners.
How was VMC able to help?
Relax Internet initially considered using cash and bank debt to fund the required infrastructure but was keen to investigate the benefits of LTM leasing. It became clear that leasing would provide specific VAT, corporation tax and group accounting benefits, and would also enable Relax Internet to operate within its bank covenants.
The company considered proposals from several funding providers, including a technology supplier, before awarding the contract to VMC. Relax Internet’s decision was made not only on the basis of price but VMC’s understanding of Relax Internet’s needs. Furthermore, Relax Internet wanted to work with a partner it could trust and valued VMC’s openness during negotiations.
The finance lease option gave Relax Internet the most flexibility in terms of what it wanted to achieve. By taking the lease over a five-year term, it was able to fit the payments to the lifecycle of the key technology developments, while spreading the cost.
“Asset finance offered the most flexible funding solution, enabling us to optimise our bank arrangements and to make the capital investment needed to move the business forward, while also providing financial and accounting benefits.”
CEO of Technology, Relax Internet
How has Relax Internet benefitted?
The benefits of finance leasing enabled Relax Internet to progress at pace with this large and complex IT project. This would not have been possible if the business had to pay for the infrastructure development upfront. To date, Relax Internet has transacted £3m of IT capital investment from an agreed £7m VMC facility’s.
Asset finance has helped Relax Internet optimise its bank arrangements without restricting its capital investment. It also provides financial and accounting benefits by enabling deferment of IVA payments and maximising its capital write down against taxable profits.
Having its own operating platform gives Relax Internet greater control of its business, and enhances its customer proposition. Relax Internet anticipates that it will deliver cost savings through standardisation of processes and also support double-digit growth across UK and international markets.
At a glance
£7m funding facility provides major investment transformation
Investment will help Relax Internet optimise its performance
VMC funding supports the delivery of double-digit growth
Finance lease provides flexibility and financial benefits
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