Alceon makes first investment with new PE strategy

Alceon has acquired a majority stake in an Australian-based Microsoft partner via its recently launched private equity fund.

The Private Equity Access Fund was launched earlier this year, targeting founder-led lower mid-market companies generating $5 million to $20 million, typically funding 50% of equity in five to six investments.

Now, the strategy has marked its inaugural investment, acquiring a majority interest in Engage Squared. Founded in 2014, Engage Squared helps enterprise and government organisations adopt artificial intelligence (AI), strengthen cybersecurity and improve productivity and collaboration through Microsoft technologies.

The company serves customers across Australia, New Zealand and the broader Asia Pacific (APAC) region and has 170 employees across eight offices.

The fresh investment provides Engage Squared support to accelerate growth in AI and agent capabilities to expand its service offering. It also marks a return by Alceon into the managed IT services sector following the successful divestment of its position in efex, Alceon said.

Alceon managing director and head of private equity Zac Midalia said the transaction reflects the strategy's aspiration to invest in scalable business models that create value.

"Engage Squared sits at the intersection of two themes where we have strong conviction: the Australian lower mid-market and enterprise adoption of AI," Midalia said.

"The business has established a commanding position within the Microsoft ecosystem, building an impressive reputation for helping organisations translate AI ambition into practical business outcomes. There is a significant opportunity to invest behind that growth story, both organically and through targeted acquisitions.

"More broadly, Alceon continues to see compelling opportunities to partner with exceptional founders and management teams operating in sectors benefiting from long-term structural growth."

Meanwhile, Engage Squared group chief executive Alastair Cashen said the firm is now placed in its strongest position since establishment.

"Every day we help some of APAC's leading organisations to turn AI ambition into real business outcomes, moving beyond experimentation to enterprise-scale adoption and transformation," Cashen said.

"This investment is about accelerating that momentum. Alceon's track record of partnering with high-growth businesses, combined with our deep Microsoft expertise and market leadership, gives us the opportunity to invest further in our people, capabilities and customers.

"We believe AI represents the most significant technology shift of our generation. As demand continues to grow, this partnership positions Engage Squared to expand our impact, help more organisations realise value from AI, and continue building the market-leading Microsoft practice in our region."

Cashen will continue to lead Engage Squared alongside the existing management team, which will retain a substantial ownership position alongside Alceon, while Engage Squared co-founder Stephen Monk will depart the business as part of the transaction.