Altron beefs up its cybersecurity business with Etion’s Lawtrust
Lawtrust, bought for R245m, had become one of Etion’s biggest earners in recent years
In a move to beef up its cybersecurity business, JSE-listed Altron has made a deal to buy fellow technology group Etion’s subsidiary Lawtrust for R245m.
Etion, previously known as Ansys, bought IT developer Lawtrust — considered one of SA’s leading digital security firms — for R109m in June 2018, and the company is now known as Etion Secure.
This is Altron’s second large acquisition in digital security, following the group’s buyout of identity authentication company Ubusha Technologies in 2020.
Lawtrust is a digital trust services and cyber information security solutions provider. Its solutions include authentication, encryption, digital signatures and biometrics through fingerprint and facial recognition technology. It provides services to more than 500 clients in the private and public sectors.
The unit had become one of Etion’s biggest earners in recent years. Etion Secure contributed 44% to group revenue and 87% to profit in the six months to end-September 2020. The Etion Secure unit had revenues of R109.4m for the period. The value of Lawtrust’s net assets at the time was R102m, while profit attributable to the unit was R21m.
Given Lawtrust’s performance for the period, Irnest Kaplan of Kaplan Equity Analysts said Altron looks to have found a good acquisition at a low multiple. Investors sometimes compare the price paid for an asset to its profits as a way to measure value.
Altron, currently valued at R4bn, has been beefing up its cybersecurity business in recent years. Its acquisition of Ubusha Technologies, for R360m, was one of the first major local acquisitions under Altron’s new leadership team led by Mteto Nyati.
“The Lawtrust acquisition brings complementary capabilities, which include the ability to prove identities of workforce, consumers, citizens and devices, and the legal non-repudiation through digital signatures and encryption,” Altron told shareholders. “Altron offers the geographic footprint and extensive customer base to support Lawtrust in its continued growth trajectory.”
Kaplan said cybersecurity is a very important part of the IT service offering because of Covid-19. With many enterprises forced to shift their staff to remote working, employees are now accessing sensitive company systems from less secure locations. This situation, among a host of factors, has increased demand for digital security, Kaplan said.
“A lot of people are working from home. Corporates have had to adapt to these changes. IT security was always important but Covid-19 has made it more critical. It’s nice to see Altron making a strong push in this area,” he said.
Altron said it was also attracted to Lawtrust’s annuity revenue base. Lawtrust makes 70% of its money through recurring business. This is in line with Altron’s own business model, which receives 65% of group revenue through annuity.
This acquisition marks Altron’s first major corporate action since the demerger and listing of its former subsidiary Bytes Technology Group in December on the London Stock Exchange and JSE. The move created about R13bn in value for Altron shareholders.
Update: April 20 2021
This article has been updated with information and comment throughout.
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