Convergence Partners today announced that its Convergence Partners Digital Infrastructure Fund (CPDIF) has entered into a definitive agreement with Alviva Holdings to acquire 100% of systems integrator Datacentrix.
The announcement comes after businessman Andile Ngcaba’s Convergence Partners last year successfully closed the CPDIF at $296 million (R5.1 billion), surpassing its initial target by over 18%.
However, the terms of the transaction were not disclosed.
In a statement, Convergence Partners says the acquisition is alongside the existing Datacentrix management team that has successfully led the company for over 20 years.
It adds that Alviva is exiting Datacentrix pursuant to its delisting from the JSE in early 2023, to focus on its core operations in hardware distribution.
Datacentrix was a subsidiary of Alviva from February 2017 after Alviva finalised the acquisition of the remainder of shares of Datacentrix that it did not already own in January that year.
At the time, Alviva said it paid out R563 million for the acquisition, although the original amount reported when the deal was first announced was R541 million.
Datacentrix is a complete ICT systems integrator that provides solutions and services across the full information value chain.
It listed on the main board of the JSE in 1998 and delisted on 14 February 2017, after being acquired by Alviva.
For Convergence Partners, the transaction aligns with the CPDIF’s strategy of investing in high growth companies that are leading champions in their field with strong management teams and deep customer and vendor relationships.
According to research, it notes, the IT market in South Africa has proven resilient even during periods of economic downturn and is forecast to outpace the country’s GDP growth.
Convergence Partners says it believes Datacentrix is well-poised to capture this growth.
It points out that Datacentrix will continue to focus on expanding into technologies that delivers business value to its clients, including digital transformation solutions, hybrid solutions from edge to cloud that is informed by the customers data and workload requirements.
It will continue to operate independently as it has in the past and does not envisage any changes in operations or staff, it adds.
Ahmed Mahomed, CEO of Datacentrix, says he is excited with the development as the entities shared a common value system, culture, vision, and approach.
“We are excited about the future as we start a new chapter in Datacentrix 25-year history as a highly successful business that is well-respected in the market. By joining forces with Convergence Partners, we will harness what has made us successful to date and leverage the wider capabilities of the group including its reach into the rest of Africa.
"We are immensely proud to announce the acquisition of Datacentrix as part of our Convergence Partners Digital Infrastructure Fund. The Datacentrix team possesses exceptional skills and profound expertise in managed services and system integration (SI). This acquisition marks a significant step for Convergence Partners as we endeavour to work alongside the Datacentrix team in building a leading SI business in South Africa and across the African continent.”
“Our confidence in Datacentrix's market leadership in managed services and system integration is steadfast. The synergy between Datacentrix’s capabilities and Convergence Partners' extensive experience in private equity, particularly through CPDIF, is poised to deliver unparalleled value to our clients across Sub-Saharan Africa, North Africa, and the Middle East,” says Ngcaba, chairman of Convergence Partners.
“Central to Datacentrix's success is its people – from the staff to the leadership team, they represent the company's most valuable asset. At Convergence Partners, we hold a deep appreciation for the talent and dedication of the Datacentrix team. It is through their collective expertise and commitment that we envision growing the business to new heights, furthering our impact in the digital infrastructure landscape.”
The transaction is expected to close in Q1 2024, subject to the customary regulatory approvals including approval by the Competition Authority of South Africa and the Independent Communications Authority of South Africa.
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