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Adapt IT eyes state deals amid graft blitz


Adapt IT sees an opportunity to build a meaningful public sector services business, thanks to efforts to root out state corruption, says CEO Sbu Shabalala.

"We like the clean-up that’s happening in the public sector and we appreciate the direct attack on corruption — it’s going to create an environment where business is given on merit," Shabalala said.

Adapt IT CEO Sbu Shabalala. Picture: SUNDAY TIMES

Less than 5% of Adapt IT’s business is geared towards the public sector, but Shabalala said there was an opportunity to grow this unit if patronage was removed from the sector.

The information and communications technology (ICT) company, which wants to nearly triple its annual revenues to R3bn by 2020, is eyeing deals that will help it reach that target.

"We are looking for sizeable acquisitions that will strengthen our existing business or extend us into other business [areas]," Shabalala said.

"With the instruments we have available, we should be able to do any transaction up to half of our business…. We now have a business with more than R1bn in turnover, so we’re looking for businesses of around R500m and up."

With financial gearing at about 40%, the company could take on more debt to fund acquisitions and also had access to cash reserves.

"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," said Shabalala.

"We have a goal to have majority black ownership, so we will be doing capital raises to apply cash to acquisitive growth, but also to ensure that we constantly leapfrog our competitors in the empowerment space."

Shabalala said there were opportunities to "consolidate" the hospitality IT market in Africa, after Adapt IT bought Micros SA in 2017.

The business provides hotel management software.

"The compound annual growth rate that is expected out of that business is around 6%, but we believe together with consolidation we can do much more," said the CEO.

Meanwhile, the acquisition of LGR Telecommunications in November 2017 was a strategic move to build a large telecommunications expense management and analytics company, Shabalala said.

Adapt IT said on Thursday its headline earnings per share rose 22% to 29.7c in the six months to December 2017.

Boosted by higher sales to the manufacturing and financial services sectors, turnover was up 46% at R674m, with organic growth at 17% and acquisitive growth contributing 35%.


LINK : https://www.businesslive.co.za/bd/companies/telecoms-and-technology/2018-01-26-adapt-it-eyes-state-deals-amid-graft-blitz/

Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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