Khumalo brothers branch out of Didata
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Information Technology Editor
DIMENSION Data has relinquished one of its oldest black empowerment credentials, by selling its 35% stake in Mthombo IT services (M-IT) for R11m.
The shares have been bought back by M-IT`s founders, CEO Nkosinathi Khumalo and his brother Lucky, the chief operating officer. T hey now hold 90% of M-IT with 10% owned by another 14 staff. That high shareholding will soon be whittled down, however, with plans to grow M-IT through paperbased acquisitions.
The company may list on the AltX board of the JSE Securities Exchange SA next year, and would release more shares to facilitate a listing, Nkosinathi Khumalo said.
The split between Didata and M-IT comes as Didata is trying to thrash out an empowerment deal to sell 25% of its South African operations to black investors.
Didata bought into the fledgling M-IT four years ago, paying R4m at a time when the empowerment trend was for white firms to buy into black businesses.
That trend has now reversed, yet M-IT had no desire to swap its own position from a subsidiary of Didata to a shareholder in Didata itself, said Nkosinathi Khumalo.
`We wanted to be masters of our own destiny, and as we grew bigger sooner or later we would be competing directly with Didata for big tenders,` he said.
`It`s an amicable divorce and we will still partner with Didata on a deal-bydeal basis.`
Negotiating Didata`s exit as a shareholder had been a year-long process, until the two sides finally agreed to meet half way on the price, said Lucky Khumalo. `Didata`s primary interest at the moment is getting strong black partners into its business, not in holding shares in black companies.`
The buy-back was mainly funded by a loan from the Industrial Development Corporation.
M-IT has grown from a seven-man team to employ 268 staff, and claims to be the third-largest blackowned technology group in the country. It expects to turn a profit of R10m this year and to hit a market capitalisation of R100m.
It recently bought 26% of document management company ACT, and is planning two more acquisitions this year. That could involve buying other companies completely, or taking a stake in complementary companies to jointly bid for tenders.
`Our strategy is to buy or partner with other strong companies to form a formidable black player in the market,` said Lucky.
M-IT will not only look at buying black companies, as its almost-exclusive black shareholding and staff profile mean it can absorb white operations and still remain empowered.
Aug 05 2004 06:59:19:000AM Lesley Stones Business Day 1st Edition
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