Business support services provider Morvest has spent R16.2 million to buy a majority stake in two technology entities, in line with its growth strategy.
Morvest says it is buying 60% of both iSolve Business Solutions and SQLDB Technology Solutions from Bhavmon, for a total of R16.2 million. The effective date is 1 January.
iSolve is black-empowered, with a majority stake held by previously-disadvantaged individuals, and provides end-to-end Microsoft solutions and other offerings such as HP, Mimecast, Cisco and FrontRange.
The listed group, which ended the six months to November with cash and cash equivalents of R80.5 million, is making the purchase through its 50%-owned unit ITQ Business Solutions. ITQ provides custom-built software solutions and outsourced development services.
Morvest says the acquisition is "consistent with its growth strategy". Towards the end of last month, CEO Mohammed Varachia said further enhancement of BEE equity ownership and expansion into Africa and other international emerging markets remained key strategic objectives as part of the group's diversification strategy.
Currently, the company earns about 95% of its revenue from within SA. It turned over R473 million in the first half and recorded total comprehensive income of R6 million, down from the R39 million in the year ago period.
Morvest will pay the R16.2 million in cash, subject to both entities meeting profit after tax hurdles in 2013 and 2014. If the hurdle is not met, the purchase price will be dropped.
Black-empowered Morvest is a holding group with a footprint in SA, Mozambique, Nigeria, India and the US. Its operations are aligned into three key divisions: business support services (including professional services and outsourcing solutions), ICT solutions, and its retail and consumer services unit.
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