Private equity investments firm Conexus Capital Growth Fund has pumped R27 million into AltX-listed digital solutions company, Etion.
Conexus, represented by Clive Douglas Investments, made a cash purchase of 70 000 000 of Etion's ordinary shares.
The shares represent 14.16% of the issued share capital of Etion, prior to the general issue, and 12.4% after the issue of the shares.
Formerly known as Ansys, Etion is a diversified digital technology solutions provider. The company changed its name earlier this year.
In a statement, the company says the Conexus deal is intended to strengthen Etion's thrust into cutting-edge digital security innovation following its acquisition of cyber security specialist, LAWTrust, in June 2018. The acquisition was valued at R108 million.
The acquisition happened alongside the group's rebranding and repositioning of its operational business divisions to be more operationally flexible and responsive to rapidly changing client needs.
Since the acquisition, Etion told ITWeb it is focusing on integrating LAWtrust as the building block of the new Etion Secure and identifying projects where it can innovate.
Today, LAWtrust provides services to over 500 clients in the private and public sectors. Its solutions include authentication, encryption, digital signatures and biometrics.
LAWtrust has since been merged into Etion Secure, the operating unit responsible for developing and implementing security solutions in the Etion value chain.
"We consider the new investment from Conexus to be a firm signal of support for Etion's transition to date and its growth plans for the future," says Teddy Daka, Etion's group CEO.
"Each of the underlying businesses in the Etion Group have significant organic growth opportunities that are at various stages of development, and should come on book in the next two to four years," says Clive Douglas, CEO of Clive Douglas Investments.
"The Etion Group has acquired a number of interesting businesses over the past few years, all led by seasoned and successful entrepreneurs. The next phase of the group will focus on integrating the four divisions and entrenching itself with its customers by offering bespoke products and high levels of service.
"Partnering with successful entrepreneurs is at the heart of Conexus's business model and this has been demonstrated in many different transactions over the past 10 years. Conexus will be appointing a representative to the board of directors, including observer rights to ensure active management of the investment on behalf of its investors," he notes.
Etion had a tough financial year to 31 March 2018, reporting a revenue decline of 29% to R572.6 million. Despite the revenue drop, the group says it is still seeing a positive revenue trend of a compounded annual growth rate of 31% over three years, as it reported revenue growth of 70% for the year ended 31 March 2017.
The group has transformed its structure to align to its growth strategy, and three new business units have been established, along three horizontal market segments. Its former mining, industrial, defence and cyber security segments have transformed to become original design manufacturing; the rail segment has transformed to safety and productivity; and the telecommunications segment has been renamed digital network.
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