JSE-listed IT firm Adapt IT announced on Wednesday that it plans to buy Australian-based Software as a Service (SaaS) group Wisenet for R54 million.
The Durban-based IT company said it has entered into Business Purchase Agreements to buy Wisenet.
Wisenet Group consists of Kura, Wisenet Australia and Wise.Net Corporate (Wisenet NZ).
The minimum total purchase consideration is SGD$5,2 million (R53.7 million) with potential earn-out adjustments over the next 3 years. The South African company said it will pay SGD$2,9 million (R30 million) in cash for Wisenet Group and SGD$2,3 million (R23.7 million) in cash for Wisenet SG.
The SaaS company, which was founded in 1997, has its head office in Melbourne, Australia and additional regional offices located in Queenstown, New Zealand and Singapore.
It provides a SaaS Learning Relationship Management System (Student Lifecycle Management and Compliance) to Vocational Training institutions called Registered Training Organisations.
It has approximately 11% of the Australian market and similar market share in its other territories. The Wisenet Group and Wisenet SG have a geographic footprint in three Asian countries and employ 22 permanent employees.
Adapt IT informed investors on Wednesday that the acquisition will complement its education division growth strategy and provide it with access to key proprietary software, customers and markets in the higher education sector in Australia.
Sbu Shabalala, CEO of Adapt IT, says the acquisition of Wisenet provides Adapt IT with an entry into the education sector in Australia.
Wisenet has a 20-year track record in the Australian market and has built a credible reputation as the leading cloud-based Learning Relationship Management platform provider in the education sector.
“The introduction of Wisenet into Adapt IT furthers our ambition to be a leading software provider in our chosen sectors, in Africa and beyond,” says Shabalala.
Wisenet is a software-based business that develops its own IP and has an annuity- based revenue model where SaaS subscriptions account for 90% of the total revenue.
The value of the net assets that are the subject of the Acquisition as at 30 June 2018 was SGD$455,373. The revenue attributable to the net assets that are the subject of the Acquisition for the year-ended 30 June 2018 was SGD$4 million. The profit after tax attributable to the net assets that are the subject of the Acquisition for the year-ended 30 June 2018 was SGD$301,408.
Wisenet CEO and co-founder, Ben Hamilton, will lead the business development efforts of Adapt IT in the APAC region, including other Adapt IT products not currently sold in the APAC region.
“We look forward to playing a meaningful role in Adapt IT’s revenue growth in Australasia. 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,” says Hamilton.
The deal is still subject to regulatory approvals in both South Africa and Australia.