AN EMPOWERMENT deal between information technology groups Prism Holdings and Gijima Technologies could bring substantial improvements to the efficiency and cost of SA's notoriously problematic pension payout system.
The market was not impressed with the deal, however. Prism was one of the top five losers in share price value on the JSE Securities Exchange after the announcement yesterday.
Prism says Gijima Technologies will acquire 25% of electronic funds transfer and bill payment processing company Prism TranSwitch Services (PTSS) for R15,3m in cash, subject to competition authorities' approval.
Combined, the two companies will be able to offer government a social grant payout solution that was far cheaper than the system it was using at present, say the new partners.
Gijima Technologies executive chairman Robert Gumede estimates that government's cost on each pension pay-out was about R20. About 5-million pensioners are paid each month.
Prism group CEO Alvin Els said it delivers transactions of higher values between retailers and banks at a cost of between R1 and R2. A payout solution at these costs will bring large savings for government, suggested Gumede. PTSS is the dominant player in the retail market, handling transactions worth about R3bn a month.
Gijima Technologies is already a large supplier of systems integration services to government. The deal will allow the company access to more advanced technology.
PTSS and Gijima Technologies are still competitors in some areas, such as in smart card supplies. But Els says that the empowerment deal is the start of a relationship which could be expanded.
"We wanted to start with something manageable," he said. Prism has had two failed attempts at empowerment.
Prism's share price fell 24,5% or 12c to close at 37c yesterday.
An analyst speculates that there may have been expectations for a bigger deal. He also says Gijima Technologies' earlier involvement in a transaction that turned sour may have perturbed investors.
Gumede says Gijima Technologies' dealings with British businessman John Sterenborg has cost his company more than R30m.
He is claiming damages worth R52m.
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