Bytes SA, a subsidiary of Altron, will acquire 27% of its issued share capital for R669-million from a consortium led by Kagiso Strategic Investments, which is indirectly owned by Kagiso Tiso Holdings (KTH), by way of a share repurchase. The acquisition will become effective on 30 June 2014.
“This transaction will be value enhancing for Altron’s shareholders, and we consider it to be an excellent allocation of capital,” says Robert Venter, chief executive of Altron.
“Bytes SA is, and has been performing well over the last few years and Altron will now own 100% of its issued share capital. Similar to our recent acquisition of the minority shares of Altech, we are investing further in a business we know well and have been managing for decades.”
KTH, through Kagiso Strategic Investments, has been a partner to Bytes SA since 2004 with non-executive representation on its board.
“The relationship has been highly fruitful for Bytes SA and the Altron group over the years. Significant value will also be realised, through this transaction, for the broad-based black economic empowerment shareholders of KTH,” says Venter.
Rob Abraham, CEO of Bytes Technology Group, says the partnership with KTH had seen significant benefits for both organisations and had demonstrated that the principles of broad-based black economic empowerment (B-BBEE) could be applied in a very positive manner. “This has probably been the most successful empowerment transaction in the IT industry in South Africa, which has been mutually beneficial for both parties,” he says.
According to Abraham, Bytes was the first IT company in South Africa to receive a B-BBEE certificate and was the first to receive a Level 3 and subsequently a Level 2 B-BBEE verification status.
“We would never have achieved this without the assistance of our partners in KTH, not only from a shareholding perspective but also from the way in which they assisted in facilitating a positive transformation exercise.
“Aligned to this is the fact that a portion of the benefits derived from the relationship have been passed on to disadvantaged communities through the Kagiso Charitable Trust and Tiso Foundation, particularly in the areas of training and education,” he adds.
Vuyisa Nkonyeni, CEO of KTH, comments: “Ours has been a long and mutually rewarding relationship with Bytes Technology Group. Having been invested in the organisation for ten years, we have continuously been impressed with the organisation and its commitment to becoming the best ICT provider in Africa.
“We have always had every confidence in the skilled management team who have a proven track record and demonstrated strong leadership characteristics. Their commitment to transformation in South Africa is remarkable and remains one of the reasons for the decision to select Bytes as a preferred partner. KTH has been privileged to have been associated with a valued organisation such as Bytes Technology Group. Our exit from Bytes bears testament to KTH’s strategy of being a long-term investment partner and we have every confidence that the company will grow from strength to strength in the future,” Nkonyeni adds.
Since the delisting of Altech in August 2013 and the formation of Altron TMT, which is a combination of the Altech and Bytes businesses, the Altron group has been in a position to review all of its broad-based black economic empowerment structures in order to align Altron TMT and Altron Power, the latter housing the Powertech operations. Altron is currently rated as a Level 2 Contributor under the recently promulgated ICT Charter Codes.
The alignment of B-BBEE structures is one of the many steps Altron has taken recently in order to streamline and elevate the group. Its restructuring project, which includes the integration of Altech and Bytes, the introduction of shared services and a drive to increase innovation and business development, is expected to be completed in the first half of 2016.
“Altron is moving from being an investment holding company to being an operating entity. In our new structure, we are not only able to run the business more efficiently, but also provide better products, services and solutions to our customers,” Venter says.
