Newly formed Loop Technology has acquired the assets of Kanbay's Australian security and connectivity business for an undisclosed sum.
General manager, Martin Bicknell, said the company had purchased its customer base, vendor partners and suppliers. All 25 former staff working in the division had also been signed on with the new organisation.
Loop's executive chairman and former Getronics CEO, Danny Sargeant, is the majority investor in the locally owned company.
The decision to sell off the Australian security integration arm was made by the US head office in December, Bicknell said. While the global company garnered about 99 per cent of its sales through the financial services sector, the local subsidiary had built a significant business around security and connectivity solutions, he said.
Kanbay will retain its headquarters in Melbourne for its remaining IT services business.
In a statement, Kanbay US chairman and CEO, Raymond Spencer, said the security and connectivity service line had not met its strategic expectations. "The products offered by the security and connectivity service line are sold at margins that are low relative to our core business," he stated. "The sale of the service line allows us to focus on our core business, realise some value for our investment and improve our operating metrics."
According to information posted on the Nasdaq, the division had contributed about $US10 million in revenue and approximately $US260,000 in pre-tax losses in 2004.
The key difference between the old organisation and the new would be the ability to solely focus on the requirements of Australian customers without the hassle of reporting back to a publicly listed overseas owner, Bicknell said.
"When you belong to a large organisation and you're not part of its core business, it is quite restrictive," he said. "Now that we are smaller and more manoeuvrable, we can be reactive to market trends more quickly."
Bicknell said the company would retain its focus on providing security and connectivity integration services. The short-term goal would be to ensure its profitability and stability.
In the mid- to long term, Loop would look to expand its range of managed services and add new vendors, he said. The company expected to announce several new partnerships in the coming months. Existing partners include RSA Security, Aventail and WRQ.
It was also planning to recruit several new sales and engineering employees to strengthen its NSW and Queensland offices. Loop maintains premises in Melbourne, Sydney and Brisbane.
Bicknell didn't rule out the possibility of a future ASX listing or acquisitions.
"Partnering and acquiring could be a long-term plan," he said. "There are a lot of integrators out there who want to get into security but don't know how to. We want to partner with them."