Adapt IT buys Australian education business
JSE-listed company acquires Melbourne-based Wisenet for R54m
JSE-listed technology company Adapt IT says it will buy an education-focused business based in Australia for about R53.6m.
The company said on Wednesday it would buy Melbourne-based Wisenet Group for $5.2m, with the purchase price subject to earn-out adjustments over the next three years.
At the request of the sellers, the purchase price could change if Adapt IT or one of its subsidiaries listed in Australia. But Adapt IT said it had no plans to do so.
Wisenet, which operates in Australia, New Zealand and Singapore, provides proprietary software to vocational training institutions. Annuity-based revenues account for 90% of the company’s turnover.
Adapt IT said the deal will boost the growth of its education division and give it access to “key proprietary software, customers and markets in the Australian education sector”.
Wisenet CEO and co-founder Ben Hamilton will lead Adapt IT’s business development efforts in the Asia Pacific, the company said.
“We look forward to playing a meaningful role in Adapt IT’s revenue growth in Australasia,” Hamilton said. “I am excited about the cross-selling opportunities between our respective organisations and believe we will be able to unlock our synergies in the medium term.”
Adapt IT CEO Sbu Shabalala said the deal “furthers our ambition to be a leading software provider in our chosen sectors, in Africa and beyond”. He told Business Day in 2018 the group, which wants to nearly triple its annual revenues to R3bn by 2020, was looking for deals to help it get there.
Shabalala said the group could absorb targets that generated more than R500m in annual revenues.
"We’ve been … fortunate that our gearing is at around 40% and there’s still some room for us to gear the business further, but also, as a cash-generating business, we do have some excess cash," he said. "And most of the vendors we meet believe there’s value in the Adapt IT share, so we can always issue the share as currency [to fund a deal]."
Adapt IT provides software services to companies operating in the manufacturing, banking, energy and resources industries, as well as to higher education institutions.