MGX Holdings has sold Software Futures to an investor consortium for R20 million, with effect from 7 August.
The transaction has been completed and depends for its finalisation only on normal suspensive conditions such as approval from shareholders, the approval of the banking consortium and the Competition Board, and due diligence, which is expected to be completed within a week.
The investor consortium is made up of Cape-based structured finance house Brown Brother Holdings and Kopano ke Matla Investment Company, an investment arm of Cosatu. Software Futures management will retain an active shareholding in the company. Kopano ke Matla will take an active management interest in Software Futures, and the investor consortium has already injected R5 milion cash into Software Futures as part of the transaction to fund a transition period.
"We view this as a strategic investment and we see a bright future for Software Futures," says Collin Matjila, CEO of Kopano ke Matla. "The company operates in a dynamic, healthy niche market, which is cushioned from the impact of the general downturn of the IT industry. Through our investment and direct involvement, we aim to assist the company in growing its market share."
"This signifies a strong vote of confidence in Software Futures," says chief operating officer Vaughan Diedrick. "Following the effective date we will no longer be affiliated in any way with MGX, and we will have 26% black empowerment ownership, which will be fully paid for by Kopano ke Matla.
"The difficulties MGX as a group has experienced have affected us negatively, as has the lack of black empowerment. We have found it difficult because of these issues to sign new customers, which has put our future at risk. This transaction takes care of these two factors, and has the benefit of providing operational cash for the business going forward until we have put this period behind us."
The investment consortium is committed to keeping the management team intact as far as possible, Diedrick stresses. To this effect, it is engaging with all executives to obtain their buy-in and determine their future roles in the company.
"There is a strong desire by both buyers in the acquiring consortium to retaining management as is," says MGX executive consultant Mike Braby. "They view this as a strategic investment. They aim to restore it to its former health, and to grow the business and make it a shining example for the IT sector."
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