Managed hosting provider DataPipe announced Tuesday that it has secured a $12 million private placement investment, and will use the funding to buy additional data center space. The funding continues a period of strong investor interest in the hosting sector. The first half of 2006 saw a flurry of acquisitions involving major hosts and domain registrars, and investment bankers say the industry is also attracting private funding from investors wanting to participate in the industry's growth.

The New Jersey company said its recent growth has prompted a global expansion. The first deal is close to home. "We have purchased a 36,000 square foot facility in central New Jersey," said Robb Allen, founder and CEO of DataPipe. "We are in the process of upgrading the infrastructure to meet the standards required of a Tier 4 facility (the highest rating under an industry standard from The Uptime Institute)." Allen said DataPipe expects to begin installing clients in the new data center in the first quarter of 2007 and expected to announce further data center acquisitions in the near future.

In addition to its Hoboken headquarters, DataPipe has operations in London and Hong Kong. The company provides managed services to enterprise companies in the pharmaceutical, banking and insurance sectors. Its core business - selling custom managed hosting and security services to enterprise and financial clients - offers some of the most attractive profit margins in the hosting industry.

"DataPipe has emerged as one of the premier providers of complex managed hosting solutions and their track record of network performance, customer growth and profitability is extremely impressive," said Peter Hopper, President of DH Capital, an investment bank that specializes in the hosting industry, served as financial advisor to DataPipe.