You must have been living in a cave if you haven’t heard of today’s tech giants and their triumphal march on share markets. Apple, Amazon and Co have pushed the Nasdaq, which is heavily weighted in favour of tech shares, to new highs, and while businesses are battling worldwide to shake off the burden of Covid-19, it appears as if these large tech companies are immune to the impact.
True, we have no companies on the FAANG scale, such as Facebook, Apple, Amazon, Netflix or Alphabet (Google), but we do have many ingenious technology entrepreneurs, who are in the right sector to appeal to private equity companies looking for acquisitions, says Andrew Bahlmann, MD of Deal Leaders Africa, a boutique advisory firm. “We’ve seen a definite appetite for lending to or investing in technology companies. The companies that are attracting acquirers’ attention are those that have rand-denominated overheads, while they generate dollar revenue. They deliver those services that work easily across borders,” says Bahlmann.
He believes what does count against South African companies is their size. “Most of the international acquirers are on the lookout for opportunities of R1bn or more. This is a problem for SA companies serving the local market. At the moment, there is more interest in this sector from the venture capital market than from private equity acquirers.”
There are only a handful of SA companies that are listed in the software and IT-sector on the JSE: Adapt IT, Altron, AYO, Bytes, Capital Appreciation, Cartrack, Cognition, Datatec, EOH, Etion, ISA, Jasco, Mixtel, Naspers*, PBT Group, Prosus, Sebata, SilverBridge and TCS.
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