(Adds comments from interview)
NEW YORK, Dec 19 (Reuters) - South Korean Web content delivery company CDNetworks Co Ltd 073710.KQ said on Wednesday it will receive $96.5 million in private investment that it planned to use to expand in the United States.
CDNetworks, the top Web acceleration service provider in Asia, said U.S. venture capital firm Oak Investment Partners will lead the investment, with South Korea’s Shinhan Private Equity and Goldman Sachs joining.
The move comes amid increased competition in the business of helping companies deliver data, video and other Internet content faster by navigating less congested routes over the Web.
“The additional funding will help CDNetworks fortify our Asian market leadership and our service offerings, while accelerating our entry into the United States and other markets,” said Samuel Ko, founder and CEO of CDNetworks.
CDNetworks ranks No. 3 worldwide in the content delivery network (CDN) industry, behind Akamai Technologies Inc AKAM.O and Limelight Networks Inc LLNW.O, according to industry data.
The company will issue an additional 5,285,034 shares at17,000 won. The three investors will enter into a one-year lock-up agreement and representatives from Oak and Shinhan will join its board.
Steve Chung, the company’s vice president of business development, said the company was considering various expansion measures, including acquisitions and capital spending.
“What this is, is us having reviewed many, many companies in Japan, China and the U.S. and believing that there are real opportunities for us to invest in great companies,” he told Reuters.
“I can’t get into details ... But we have all options open including M&A, strategic partnerships, capital expenditure and operational growth.”
Another CDNetworks executive said last month the company is in talks to supply content delivery services to social network sites MySpace and Facebook, and security software companies.
So far, CDNetworks has focused on serving Asia-based customers in China, Japan and South Korea. Customers include Japan's Toyota Motor Corp 7203.T and South Korea's hanarotelecom.
Chung acknowledged a rise in pricing pressure, but said CDNetworks did not plan to pitch discounts for its U.S. expansion.
Analysts have said competition could heat up ahead as more companies such as Level 3 Communications Inc LVLT.O enter the CDN business and low-cost players such as Panther Express step up their efforts.
Chung also saw the CDN market expanding due to increasing Internet traffic, as consumers’ Web usage expands from text to photos, music and video. The shift to high-definition video entertainment over the Web is also pushing global Internet traffic.
“Data size and needs are getting faster and bigger, so we definitely see it as a market that will continue to grow in 2008 and beyond,” he said. (Reporting by Ritsuko Ando; Editing by Gary Hill/Andre Grenon)
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