Datatec opts to delist from London’s AIM

INFORMATION and communications technology company Datatec announced it would delist its secondary listing on the Alternative Investment Market of the London Stock Exchange (AIM) from December 8. But it was quick to allay the fears of shareholders and investors by saying that it would continue with its primary listing on the JSE, as it would not be affected by the cancellation of the AIM listing.

In explaining the intended delisting, the group said its listing on AIM for the past 11 years had not delivered any benefits.

“The AIM listing has not had the desired effect of diversifying Datatec’s investor base. The liquidity of the shares on AIM has been very poor and no significant investors from the UK market have invested in Datatec shares via AIM,” the group said.

Datatec initiated a secondary listing of its shares on AIM in October 2006, with the intention of providing the group with greater access to capital with which to support the continued growth of its international businesses and to attract a broader range of institutional investors.

However, 24 percent of Datatec’s shareholders were non-South African and invest via the JSE, because of the good liquidity in the market.

Peter Takaendesa, a portfolio manager at Mergence Investment Managers, agreed that the AIM listing never delivered the intended benefits, because most foreign shareholders preferred to obtain exposure to Datatec’s shares through the more liquid primary JSE listing.

“The delisting is also timely and appropriate now, as Datatec does not require a capital raise post receiving more than $630 million (R8.63 billion) in cash proceeds from selling part of Westcon to Synnex Corporation.

“Datatec is actually looking to return excess cash to shareholders. The company has also indicated that they are working on reducing central overheads to rightsize the remaining operations, so we believe this delisting is part of the measures in this regard,” Takaendesa said.

No significant investors from the UK market have invested in Datatec shares via AIM.

Last month, Datatec sold its Weston-Comstor America business for $800m to Synnex. In June, Datatec acquired a 54 percent stake in Indonesian company Packet Systems Indonesia for $6.8m, through its subsidiary Logicalis.

The group consists of three divisions: Logicalis, Weston-Comstor and the minor division corporate, consulting and financial services.

While in the process of delisting in London, the AIM regulation has confirmed that shareholder approval for the cancellation of the AIM listing is not required, because Datatec shares will continue to be listed on the JSE, which is an AIM designated market.

Datatec shares fell 0.26 percent to close at R57.30 on the JSE yesterday.