JSE-listed Connection Group Holdings is to sell 50% of its wholly owned subsidiary, Enterprise Connection, to Canal Square Investments Pty Ltd, a 100% black-owned company.
Connection intends to exit completely from Enterprise Connection, its corporate IT solutions provider. The remaining 50% will be sold to Canal Square within two years. Connection Group will retain management control until the second phase is completed. Paul Moses will continue in his capacity as managing director of Enterprise Connection while Johan de Villiers the GM of Enterprise Connection Cape joins the board as an executive director.
Connection will then focus completely on retail. Incredible Connection, the retail IT market leader, will be Connection`s core asset.
Said Connection Group Holdings CEO Toni Fourie: "The transaction allows us to profitably exit from our last remaining IT asset while making a positive contribution to black economic empowerment at a grass roots level. We made a strategic decision a year ago to focus on our core business and skill set of retail.
"We are placing Enterprise Connection in very capable hands and we believe that, with the empowerment credentials of Canal Square, it will go from strength to strength."
Fourie said IT retailing promises an exciting future. He pointed out that at present only 12% of South Africans have computers at home, while television penetration in LSM 6-10 has grown from zero to 97% since 1976. If PC market penetration remotely parallels that of TV, CGH as the market leader is in a strong position to capitalise on the opportunity in the medium- to long-term.
Four young black business professionals, who have proven themselves in different areas of business, are the sole shareholders of Canal Square Investments. Young they may be but they boast a collective 37 years at senior level in top corporates. Three of them have been close friends growing up and studying at the University of Cape Town together.
Mncedisi Mayekiso, who was partner and sales manager, Enterprise and Partner group of Microsoft, joined Paul Moses` team as an executive director of Enterprise Connection responsible for new business development. He has Bachelor of Social Science and Humanities Degree, Postgraduate Diploma in Management from UCT and an MBA degree from City University Business School, London.
Enterprise Connection operates in three markets: IT hardware, Microsoft solutions incorporating licensing solutions and IT operations outsourcing. Most of its clients are private sector corporates but the intention is to win public sector and parastatal work in the future.
"In Enterprise Connection we are trying to build a new South African company that embraces the diversity of our people, cultures, spirit and ideas," said Mayekiso.
Coming out of Microsoft, Mncedisi is already more than familiar with the workings of Enterprise Connection. Indeed, Connection Group companies have long been important customers of Microsoft in SA.
Mncedisi said: "Canal Square is founded on a simple philosophy - we believe the next platform of economic growth in SA will be catalysed by a new breed of young black South Africans. These are young people who have spent the early years of SA`s liberation cutting their business skills at high level in SA and multinational companies. The average age of our directors is 33 years."
Moses said Connection Group was attracted to Canal Square because it was impressed with the professional track records of the individuals behind it. They were entrepreneurs with high energy, extensive business experience and a great vision for the future of IT and empowerment. The deal is intended to extend the footprint of black economic empowerment by introducing new players with established professional track records.
The vision of Canal Square is to be among the top five black-owned leading private investment groups. It will select investments, where it can add value through operational involvement.
Mayekiso is the only one of the partners of Canal Square Investments who will take an executive role at Enterprise Connection. The others will be non-executive directors and will continue working at their present places of employment, while Canal Square develops.
The other partners in Canal Square are:
Ciko Thomas, a marketing professional, who is general manager retail banking services at Absa. He developed his marketing skills at companies such as Unilever, M-Net, BAT, SA Breweries and Absa. He serves on the board of Communication and Advertising Forum for Empowerment. Thomas graduated in chemistry at UCT and holds an MBA from Wits. In addition, he has studied general management at Erasmus University in Rotterdam.
Mzwandile Nomkonwa is an investment banker in the African Harvest corporate finance team. After graduating in chemical engineering at UCT, he worked in process engineering, production management, project and industrial financing. He completed an MBA at UCT and undertook marketing of equity-based structured products for Gensec Bank.
Litha Nkombisa, a senior manager in corporate banking at Nedbank`s corporate division, has worked at BMW in Munich and SA. He worked in dealer development at Delta Motor Corporation before joining Nedbank. The Association of Black Securities and Investment Professionals recently nominated him the top corporate banker in SA in 2002/2003.
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