As we predicted in our April Fool’s Joke last year, IDC has been sold as part of a Chinese-led purchase that leaves CEO Kirk Campbell at the helm. IDG Capital will take control of the IDG Ventures; China Oceanwide will control IDG and most of IDC, and an independent trustee will take control of IDC’s High Performance Computing (HPC) practice, led by Dr Earl Joseph, which is a valued advisor to government clients. As the April Fool suggests, the terms of the deal were widely rumoured and have followed a period of profit-booting choices by IDG which has left some IDC staff feeling bruised. The hope is now that IDC’s profits will at least partly be reinvested in its growth.
China Oceanwide is a vehicle for Chinese investor keen to diversify their investments globally. Much of its work is in real estate, although it has holdings in Lenovo and in one of China’s leading non-state banks. Given IDG’s substantial investments and property portfolio, IDC is probably of little strategic interest to the buyer (especially since it’s only recently been a notably profitable business).
Many of those most familiar with the deal consider the purchase to be great news for IDC. After years of tight administration leading to Goldman Sach’s brokerage of the sale, IDC is now one of the more closely managed, faster-growing and more profitable analyst firms and an increasingly strategic advisor to clients, including IDG Capital. The purchase leaves the IDC leadership team in place. They could take the opportunity to plough their higher profitability back into investment, for both organic and non-organic growth. Now based in 50 countries, IDC is uniquely positioned to allow fast growth.
While we are optimistic for IDC, we also appreciate that some employees will wonder what rate of growth will be enough to maintain the independence of the IDC managers. In the short term, most IDC analysts will be happy to see the uncertainty end. The HPC team, however, will have to wait for the trustee to find a new buyer (presumably US-owned) to allow them to continue their valuable work.