I don`t believe in being biggest, I believe in being the best," says IQ Business Group MD Johan Roets. But that is not quite true.
Speaking to Roets you realise that he believes size does matter, especially in the South African market. "There is a lot of noise in the local [IT] market that you have to get above to be noticed." You may be able to differentiate yourself with your business model or value proposition, but size is a factor too. That explains the growth the company has seen in its short history. On its first birthday in August it will have over 350 employees and has projected a turnover of R120 million for the 1999 financial year.
The same goes for a listing on the JSE - size matters. "I have always said that if we list it would be to raise some serious cash, not the couple of hundred million some other guys talk about." How serious? "Very serious."
But a listing is not on the cards for a while yet, and definitely not in the next six months. "We have lots of fingers in a couple of Y2K pies, and we need to keep an eye on those," he says, referring to projects for clients like Investec and Fedsure Health. "We would probably be looking at the first quarter of 2001 if we were looking, after everything has calmed down."
And there`s no doubt as to the reason for a listing - it`s about raising capital and nothing else. "I don`t want to be backed into a corner and be forced to do some deal. I want to negotiate from a position of strength."
Potential partner
A listing does seem possible, however. "We will do one big thing overseas before we list," Roets says to a background of persistent rumours that the company is in the process of identifying a potential partner. Add to that the black empowerment group Hosken Consolidated Investments and possibility becomes probability. Hosken, with its 22% stake, has a policy of preparing an exit strategy as its investments mature.
When the time comes for international expansion that too will be big. "I am scared of the US [market]. When we go in there, we go big." Going big does not necessarily mean going fast. It could mean setting up foothold infrastructure with people on the ground to scan the horizon for likely deals. That is pretty much what a small organic team in the UK and the joint venture in Australia is doing. In countries like that, with a similar culture and language, you can duplicate the South African business model, Roets says.
He believes that moving too fast can be fatal for a company, despite the speed at which his own is growing. "You can`t just go out and buy stuff," he says, perhaps with the woes of some other IT companies in mind. "There is a theory that in IT time stands still while you are doing a deal. In that time your competitors are moving ahead while you go nowhere."
That is one of the reasons he sees the SA market as wide open at the moment, and why international expansion is not an immediate priority. "Other companies are doing deals overseas with their best, greatest guys. We are playing against the B-team back home." But at the same time he says the decision to send the A-team on the road is not only understandable, it is essential. "If I pump R100 million into a company I am not just going to let it go. I will be all over those guys like a bad rash."
Being Dimension Data
"I try not to be anybody, but I wouldn`t mind being DiData," Roets says. "They make money and they have respect; they are the 'noble house` of IT."
But IQ is very different from DiData. Its financial services, logistics and healthcare departments may have started out equal, but healthcare has grown so much that its MD can seriously discuss spinning it off as a separate entity. "Healthcare," he says, "is on steroids."
IQ Health, the joint venture with Fedsure formed in January, has grown tremendously before and after acquiring 50% in the iHTech healthcare IT assets. Roets promises more of the same in the near future. "If [IQ Health] went off on its own it could even be looking at a main board listing."
Beating forecasts
If ever there was a man with confidence in his company it is Roets. "We have a good business and a strong management team." The management team, which describes itself as an Arthur Andersen alumni club, holds more than 25% of the IQ group. That in itself is a pretty good motivator. "We share a lot of background and we share a vision. I said it would take us two years to cement ourselves locally, and we are going into year two," he says, indicating that growth will now start turning into profit.
But it still takes a strong stomach to say you could double a projection of R120 million. As a private company there is very little financial information available on IQ, so time will have to tell. There is little chance of getting a glimpse at any figures soon, the company tells us, as several deals are underway that could have a noticeable impact on the bottom-line.
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