Wholesale IP transit provider Vocus is the subject of a $20 million buyout offer by the Investec-backed First Opportunity Fund.
Vocus counts the likes of iiNet, Internode and TransACT among its 100 customers.
Chief executive James Spenceley told iTnews the proposed buyout would provide "a lot more capital and opportunity" for Vocus.
"We've probably grown as far as we could without some additional investment," he told iTnews.
Spenceley said the focus was on bedding down the deal and no specific plans for expansion were confirmed.
If it goes ahead, the deal would see Vocus become a listed company on the Australian Stock Exchange. The fund said it plans to rename as Vocus Communications if the deal goes through.
Spenceley is among those to be made a director of the new Vocus should the acquisition be approved.
iTnews can also reveal that the ex-chief of wireless operator Unwired, David Spence, is expected to take up the role of chairman if the buyout is completed.
Spence left Unwired in early February. The new role would come into effect on the day the new Vocus is listed.
"This was the most enticing opportunity around at the moment," Spence said.
"I'm delighted to be lending James [Spenceley] a hand and taking on the position of chairman."
Spence had not accepted a role with Vocus in the meantime, he said.
Funding the offer
The First Opportunity Fund, which is backed by Investec, said in a statement that the proposed offer would be funded with a mix of existing cash reserves, share placement and a public offer of the fund's shares to raise more capital.
If it gets shareholder approval, the fund will make a cash payment of just over $6.5 million to Vocus shareholders.
It also plans to issue 26,952,991 fully paid shares in the fund to Vocus shareholders at an issue price of $0.50 to make up the remaining $13.47 million offered.
"[The fund] will seek to raise up to $6 million through as combination of share placements and a public offer under a Prospectus to partially fund the acquisition of the shares in Vocus," it said.
It was hoped the acquisition would be complete by 22 June, 2010.
The acquisition still leaves Vocus as one of the last remaining telco/ISP-neutral IP transit operators in Australia, following the acquisition of Pipe Networks by TPG.
Investec Wentworth Private Equity (IWPE) is an Australian private equity fund manager with over $500 million in funds under management.