PAROW-based industrials supply giant Invicta Holdings – a group built on decades of smart acquisitions – is firmly back on the front foot.
The group – which is controlled by retail tycoon Christo Wiese – last month, announced an agreement to acquire a majority shareholding in Dartcom for R565m. This is the biggest acquisition made by Invicta since Steven Joffe – the former boss of casino group Gold Reef – took over as CEO. Joffe was parachuted into Invicta two years ago to clean up the balance sheet, shed non-core businesses and find new growth traction.
The Dartcom deal is a bold move in that it represents an interesting departure for Invicta from traditional industrial equipment supplies like its core business in Bearing Man. Dartcom is a distributor of communication and renewable energy technology equipment and solutions in South Africa and across the African continent.
The group offers a wide range of solutions across the following radio frequency technology, fibre connectivity and fibre management solutions, fibre network products and solutions as well as power and renewable energy solutions.
Dartcom Fibre Solutions (DFS) is a wholly owned subsidiary of DSA, and is a locally based manufacturer of fibre optic cables under license from OFS Fitel LLC (a subsidiary of Furukawa Electric of Japan.
Interestingly, Dartcom recently established Gbitel – which specialises in the design, build and transfer of fibre networks, as well as tower and power infrastructure projects through a model that benefits small, medium and micro enterprises (SMMEs).
Invicta said the advance on Dartcom formed part of its strategy to diversify from its industrial base in South Africa to establish a diversified telecommunications, renewable energy and related battery storage technologies solutions provider.
Invicta maintained it could “emulate and leverage off” of the existing engineering services and product distribution platform that the group had built over the past decades.
The majority 78% shareholding in Dartcom was acquired from New GX Capital Group. New GX Capital will become a meaningful shareholder in Invicta after accepting 16.5m Invicta shares (as well as R50m in cash) for their shareholding in Dartcom.
The fact that New GX Capital is accepting script as settlement for the bulk of the purchase price for Dartcom suggests the vendors have great confidence in Invicta extracting strong synergies from the relationship.
Invicta disclosed that Dartcom posted a consolidated net profit of R14.2 million for the year to end March 2021. This profit figure included a loss from foreign exchange of R33 million, and reflected muted trading conditions in the markets in which Dartcom Group operated during the Covid-19 lockdowns.
Invicta noted: “As a significant increase in the profits of the Dartcom Group is expected, the parties have agreed a profit warranty…” Specifically, the Dartcom vendors have guaranteed that the group will deliver cumulative consolidated net profit after tax of at least R349 million over a three year period. That puts the price tag in far clearer perspective.
