Nedcor is set make an investment gain in the region of R5.2 billion when it converts its holding in Dimension Data International for a stake in the London-listed Dimension Data plc.
Outlining its IT strategy at a press conference in Johannesburg today, Nedcor said that its 25% holding in Dimension Data`s international operations will be converted for an estimated 10% stake in Dimension Data plc.
A 10% shareholding in Dimension Data plc values Nedcor`s investment at approximately R8.1 billion (calculated at Friday`s closing share price of lb6.17). This market valuation gives the financial services group an investment surplus of R5.2 billion over the book value of the investment, R2.9 billion.
Nedcor CE Richard Laubscher said the group intended to retain a strategic stake in Dimension Data plc. "The exchange will see Nedcor moving into a liquid international investment that can be valued and assessed by the market," he said.
The exchange is subject to board and shareholders` approval, and to regulatory approval.
Laubscher said the total value of Nedcor`s technology investments is R9.1 billion, which makes the group SA`s second largest information technology company - Dimension Data being the largest.
The group also announced today that it had acquired a 25.1% stake in unlisted IT company The IQ Business Group for R142.4 million.
About Nedcor`s investment in Dimension Data
Nedcor purchased a 25.1% stake in Dimension Data International (DDIL) in October 1997 for $88 million. Nedcor maintained its interest throughout DDIL`s rapid acquisition and expansion trail, which included buying GK Communications (UK), Chernikeeff Networks Limited (UK), and the European networking operations of Comparex Holdings.
At the time of purchasing Comparex, Nedcor diluted its shareholding in DDIL to 20.1% but retained an option to repurchase 5%. This option is being taken into account in determining the value of Nedcor`s effective interest in DDIL. The book value of the investment to Nedcor is R2.9 billion, after writing off goodwill of R641 million last year.
[Source: Nedcor Media Relations]
About Nedcor`s technology investments
In addition to Dimension Data, Nedcor has the following technology investments:
25.1% of The IQ Business Group, a software and outsourcing company, for R142.2 million (announced today).
31.7% of Miraculum, an e-procurement B2B company, at a cost of R7 million.
74.9% of Nihilent Technologies, an Indian software company, for an investment of R70 million.
26% of Aplitec, a smart card technology company, for R114 million.
37.3% of the merged operations of NedTel Cellular and Nashua Cellular, creating the largest independent cellular service provider in SA, at a book value of R36 million.
20% of The Internet Solution, the leading corporate Internet service provider, for R330 million.
20% of OmniLink, a virtual private network company, at a book value of R56 million.
[Source: Nedcor Media Relations]
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