CDNetworks Racks Up $96.5M

Guess they weren't kidding around about those expansion plans.

CDNetworks Co. Ltd. , based in South Korea, announced a $96.5 million funding round late yesterday, some of which seems likely to go towards the content delivery network provider's hopes of building its U.S. business. (See CDNetworks Raises $96.5M.)

We can't tell for sure, though, as CDNetworks executives in Korea could not be reached by press time. The company said it didn't have a spokesperson available in its San Jose, Calif., office. Maybe everybody there was already out.

Investors in the funding round were Goldman Sachs & Co. , Shinhan Private Equity, and lead investor Oak Investment Partners .

Because CDNetworks is publicly traded in Korea, the deal involves the issue of roughly 5.3 million shares of stock among the investors. The shares are being purchased at a price of 17,000 Korean won ($18.02) apiece, and the investors have agreed to a one-year lockup before they can sell.

CDNetworks claims to be the top CDN provider in Asia and the No. 3 provider in the world, according to some reports. And in its press release, CDNetworks noted that some of the funding would be pumped into its Asian business.

More dramatically, CDNetworks talked big in July about expanding that U.S. presence. It wasn't clear, though, how well it will stand out against Akamai Technologies Inc. (Nasdaq: AKAM) and Limelight Networks Inc. (Nasdaq: LLNW), let alone the hordes of CDN providers that have cropped up. (See CDNetworks Pushes Into US.)

At least one analyst, Sameet Sinha of Kaufman Bros. LP , thinks the increased competition could siphon off business from the big players. And he said that before AT&T Inc. (NYSE: T) announced plans to get into the game. (See More CDN Pressures Ahead and AT&T Prepares CDN Push.)

— Craig Matsumoto, West Coast Editor, Light Reading

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