Datatec plans to continue its acquisition strategy, despite its disappointing London listing this week, as the group can use shares traded there as a means of completing transactions, says Datatec CEO Jens Montanana.
"The important thing is that we have this listing behind us. Our floatation was limited by our South African shareholders limiting the shares to be listed in London to 10% of our total issue and, secondly, the European IT sector has not been the investors` darling recently," he says.
On Tuesday, Datatec made its appearance on the London Alternative Investment Market (AIM).
AIM caters for companies that do not want to list on the main board of that securities exchange and operates broadly similar to the Johannesburg Stock Exchange`s AltX.
The truncated listing saw less than half the allocated Datatec shares being taken up by institutional investors, raising lb13.9 million of the lb29 million it was hoping to get.
"Datatec`s shares can be traded on both exchanges, which is good for all investors. We will also be able to issue London-listed shares in lieu of cash for purchases. For American vendors, the London shares are more appealing than the Johannesburg ones," Montanana says.
Little difference
Old Mutual Asset Managers analyst Steven Minnaar says the listing was good news for local investors as it was done at the lowest cost to local shareholders, but the listing was probably small by European standards.
"For the European market, this was probably considered a tiny listing. We see similar situations in SA, where an interesting, but very small company lists but it makes little or no difference for a large investment portfolio," he says.
Montanana says the decision to list on AIM, rather than the New York tech-heavy exchange, Nasdaq, was due to the costs of governance.
"New York would have cost us between $5 million and $7 million in governance fees annually and the AIM route is a lot cheaper," he says.
Datatec is one of the few network equipment distributors in the world with less than 2% of its revenue collected from SA, its place of birth. The 20-year-old company has expanded into North America and the Asia Pacific regions.
Montanana says the group is comfortable with US networking manufacturer Cisco being a key part of its product strategy.
"Cisco`s guidance for this year is that it expects revenue growth of 12% to 15%, and its products contribute to 49% of our group revenue and to 30% of our profit," he says.
By late morning, the Datatec share price had dropped 14c to R29.65 in light trade.
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