In a private equity deal, Conexus Investment Fund has bought 20% of Magix Integration, a technology-assisted risk management company, for R11 million.
According to Chris Hills, Magix chairman, the deal sets up Conexus as an equal partner with the company's existing shareholders.
"The Conexus investment provides a valuable injection of capital that will allow the company to expand into additional value-adding areas of business," says Hills.
The deal also highlights Magix's aim to pursue future non-organic growth. "The intention is not to be acquisitive in terms of buying a company, at least not yet," says Clive Douglas, Conexus founder and manager.
He says the focus of the investment will begin with new technology, staff or a relationship acquisition.
Douglas does not rule out a listing in Magix's future. However, he notes the investment has been made to achieve a long-term return. "We're not here to get in the spotlight, but to do the right things to allow the business to realise its potential."
According to Hills, there is nothing specific on the table yet.
Great expectations
Hills says the deal emerged from a certain level of trust, since Douglas and Hills have had a long-standing relationship.
"He was a long-time shareholder of MGX, where I was one of the original founders. He really followed our ups and downs."
Douglas was one of the first institutional shareholders of MGX from the time of its listing in 1995.
Magix is not going into a new field where it has no track record of success, he says. "It is in a fortunate position of being profitable and debt-free, which will enable us to use this capital to fund our anticipated growth."
Douglas expects a growth rate of at least 30% per year, which he says is a requirement for the investors. "We would not invest in a company that did not demonstrate a solid growth rate."
He says Magix can definitely achieve this rate, because it has shown consistent growth and the target is built from a relatively small base.
Related stories:
Internal corporate threats sniffed out
ERM education necessary
Software Futures sold for R12.2m
Share
