Ayo Tech­nol­ogy ac­quires a 55% stake in Sizwe Africa Group for R165 mil­lion

Pur­chase in line with Ayo’s strat­egy to grow its un­der­ly­ing as­sets and op­er­a­tions

The Mercury - - FRONT PAGE - JOSEPH BOOYSEN joseph.booysen@inl.co.za

AYO TECH­NOL­OGY, the coun­try’s largest black em­pow­er­ment in­for­ma­tion tech­nol­ogy com­pany, yes­ter­day an­nounced that it had ac­quired a 55 per­cent stake in Sizwe Africa Group for R165 mil­lion.

Ayo said the pur­chase price would be based on an en­tity value of R300m, based on a R70m earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (Ebitda)

Ayo chair­per­son Dr Wal­lace Mgoqi said the group would pay 90 per­cent of the pur­chase price up front with the bal­ance set­tled on an­tic­i­pated prof­its in a 3- to 5-year pe­riod. Mgoqi said the trans­ac­tion would be sub­ject to var­i­ous con­di­tions that would include the con­clu­sion of def­i­nite agree­ments.

He said the pur­chase was in line with Ayo’s growth strat­egy to grow its un­der­ly­ing as­sets and op­er­a­tions.

“The deal will also cre­ate scale within the Ayo plat­forms, thereby broad­en­ing its cus­tomer base and pres­ence,” Mgoqi said. “The trans­ac­tion will also add long-term syn­ergy and value in the busi­nesses that we in­vest in.”

Ayo has em­barked on a mas­sive ex­pan­sion strat­egy, which saw it sign­ing a multi-year in­for­ma­tion tech­nol­ogy con­tract with en­ergy gi­ant Sa­sol. The deal, which is be­lieved to be val­ued at more than R2 bil­lion, would see Ayo pro­vid­ing and man­ag­ing Sa­sol’s en­tire global tech­nol­ogy net­work, com­mu­ni­ca­tions and se­cu­rity ser­vices.

Sizwe is one of South Africa’s lead­ing in­te­grated ICT solution providers. Its ser­vices include a fo­cused spec­trum on in­fra­struc­ture, metro and long-dis­tance op­tic fi­bre stor­age server pro­cess­ing and data cen­tres. Its clients include, among oth­ers, var­i­ous gov­ern­ment de­part­ments and blue chip com­pa­nies such as Vo­da­com, Neo­tel, Cell-C, Exxaro and Bar­loworld.

Dur­ing the year to end June, Sizwe re­ported more than R1bn in rev­enues, strong cash gen­er­ated from op­er­a­tions and strong Ebitda.

Chief ex­ec­u­tive Hanno van Dyk said the Ayo pur­chase was a ground­break­ing BEE trans­ac­tion in the ICT sec­tor. Van Dyk said the trans­ac­tion would pro­pel Sizwe to new heights.

“Sizwe’s com­mit­ment to its trans­for­ma­tion strat­egy is echoed by the trans­ac­tion with Ayo,” Van Dyk said. “Af­ter 5 years of re­mark­able or­ganic growth, Sizwe is now fo­cused on the next level of development with our prod­uct, ser­vices and syn­ergy with Ayo.”

Mgoqi said the Sizwe pur­chase would ex­clude an­tic­i­pated ex­po­nen­tial cap­i­tal ap­pre­ci­a­tion and boost Ayo rev­enue, ser­vice and prod­uct of­fer­ing sig­nif­i­cantly, while al­low­ing it to cap­ture fur­ther mar­ket share and over­all pres­ence.

“This ac­qui­si­tion serves as fur­ther ev­i­dence of Ayo’s re­solve to im­ple­ment the ob­jec­tives of its strate­gic roadmap,” he said.

“The in­vest­ment into Sizwe is set to more than dou­ble Ayo’s rev­enue and sig­nif­i­cantly con­trib­ute to grow­ing its bot­tom line.”

Ayo shares closed un­changed at R29.75 on the JSE yes­ter­day.

Hanno van Dyk, group chief ex­ec­u­tive of Sizwe IT Group, and Dr Wal­lace Mgopi, in­de­pen­dent non-ex­ec­u­tive chair­per­son of Ayo Tech­nol­ogy So­lu­tions Lim­ited. | COURT­NEY AFRICA / African News Agency (ANA)

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