Adapt IT, an innovative ICT company listed on the JSE, said it will buy Wisenet Group, an education-focused business based in Australia for $5.2 million.
The company said it will by the Melbourne-based firm with the purchase price subject to earn-out adjustments over the next three years. The sellers note that the purchase price could change if Adapt IT or one of its subsidiaries gets listed in Australia. However, Adapt IT said it has no plans to get listed.
Wisenet provides proprietary software to vocational training institutions. The company operates in Australia, New Zealand and Singapore and annuity based revenues account for 90% of its turnover.
Adapt IT said the deal will boost the growth of its education division and give it access to “key proprietary software, customers and markets in the Australian education sector”. The company said Ben Hamilton, the CEO of Wisenet will lead Adapt IT’s business development efforts in the Asia Pacific.
Hamilton said “we look forward to playing a meaningful role in Adapt IT’s revenue growth in Australasia. I am excited about the cross-selling opportunities between our respective organisations and believe we will be able to unlock our synergies in the medium term”.
According to Sbu Shabalala, the CEO of Adapt IT, the deal “furthers our ambition to be a leading software provider in our chosen sectors, in Africa and beyond”. He said the company wants to nearly triple its annual revenues to 3 billion rand by 2020 and is looking for deals to help it get there.
Shabalala said the group could absorb targets that generated more than 500 million rand in annual revenues. He said “we’ve been fortunate that our gearing is at around 40% and there’s still some room for us to gear the business further, but also, as a cash-generating business, we do have some excess cash. And most of the vendors we meet believe there’s value in the Adapt IT share, so we can always issue the share as currency [to fund a deal]”.
The South African technology company provides software services to companies operating in the manufacturing, banking, energy and resources industries, as well as to higher education institutions.