Business Connexion (BCX) views continuing expansion outside of SA as "crucial" for its future growth as it envisages becoming a pan-African organisation.
The group wants between 25% and 30% of its revenue to be generated outside of SA within the next two to three years, says CEO Benjamin Mophatlane. Its international operations accounted for R532.3 million of its R6.2 billion revenue for the year to August.
As part of its growth strategy, BCX is looking for acquisition opportunities, especially in Nigeria, says Mophatlane. He notes, however, that deals are hard to come by, and are not reasonably priced.
Baby steps
BCX will proceed cautiously, and will not be inking massive contracts, says Mophatlane. It is looking at two opportunities in Nigeria, which are close to being inked.
Mophatlane cannot currently provide more details on the deals, but notes that, as a general guideline, the company is looking to buy entities that add intellectual property to its mix.
It has also recently expanded into Botswana. Mophatlane says the R12 million acquisition of point-of-sale support company Ultimate Solutions gives it an entry point into the low-risk country, as well as providing annuity revenue. The deal is still subject to regulatory approvals.
The group, which does not have a merger and acquisition budget, ended the year with R196.8 million in cash and cash equivalents. Mophatlane says its balance sheet could be geared up by as much as R500 million, if need be, to fund deals.
BCX, which could also issue shares to pay for a purchase, is keeping an eye out for vertical opportunities, which it will chase as they come, says Mophatlane.
During the year, it made several acquisitions, including Integr8, which accounted for 2.1% of its 5.9% revenue growth, says CFO Lawrence Weitzman.
Government spend
Mophatlane says the public sector is key for the company as there is scope to grow its share of that pie. Currently, 7% of BCX's revenue comes from government ICT spending, a figure that gives it a 2.5% share.
BCX is targeting about 10% of state ICT spending, a figure it would like to achieve in the next two to three years, says Mophatlane. During the financial year that ended in August, the group won a five-year, R419 million deal with the Department of Water Affairs.
At the time, it said this was an important win, as it gave it an entry point into government.
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