JSE-listed outsourcing company Business Connexion (BCX) is on the lookout for merger and acquisition deals in Africa, as it seeks to expand its base on the continent.
The company, which this morning released its interim results, says the ICT sector is in the middle of change and consolidation, which presents opportunities for it to pursue.
BCX, which has around 7 000 staff members across its operations, reported a revenue gain of 8%, to R2.9 billion, in the six months to February. Operating profit moved 10.9% higher, to R145.1 million, and its operating profit margin was 5%, up from 4.7% at year-end.
CEO Benjamin Mophatlane says although the global economy has seen a patchy recovery and trading conditions are still challenging, BCX is more competitive and in a healthier financial position than it was two years ago.
Bigger scope
Deputy CEO Vanessa Olver says the group can afford to spend between R300 million and R500 million, based on the strength of its balance sheet. Should it need to raise more capital, it can turn to the market or debt, she adds.
Olver says the company has looked at doing deals in Africa, but the prices have been too high and not justified. In some instances, she adds, the risk of a transaction is also high.
BCX looked at one or two potential deals this year, but the opportunities were not "doable," says Olver. She adds that potential deals are currently slim.
Mergers and acquisitions are a definite strategy for growth in Africa, while its South African operations would be based on its vertical needs to service sectors such as mining, manufacturing, petrochemicals and the public sector, says Olver. She adds that BCX will stay in the ICT sector when buying new entities.
BCX is focusing its African energies on Kenya and Nigeria, which gives it a base in East and West Africa, says Olver. She notes that the company is also seeking to create subsidiaries in countries such as Zimbabwe, Ghana and Ethiopia, as it aims to cover Central, East and West Africa.
Currently, it has offices in Botswana, Namibia, Zambia, Tanzania, Mozambique, Kenya and Nigeria. It also services countries such as Tunisia, Egypt, Mali, Angola and the Democratic Republic of Congo through points of presence, or via other countries.
Olver says BCX has also been looking at an Angolan subsidiary, but operating in the country is tricky and this will be a longer-term option. She says BCX wants to bed down East, West and Central Africa before looking further north.
BCX's full-year capital spend is expected to come in at between R200 million and R250 million, depending on clients' needs, says Olver. She notes that two-thirds was invested in the first half, which mostly went into its cloud offerings in Nigeria and SA.
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