Sydney-based distributor, itX, will step up its acquisitions hunt following its decision to list on the Australian Stock Exchange. The company has launched an Initial Public Offering of 17.5 million shares at $0.50 per share to raise $8.75 million. The offer represents a 35 per cent stake in the company. The remaining 65 per cent will stay in the hands of senior management.
itX has spent the past three months conducting due diligence. It estimates listing costs will exceed $600,000. It plans to go live on April 11. Managing director, Laurie Sellers, said listing had been on the minds of the management team since the local buyout in 2004. It had just been a question of when. The main reason was to facilitate acquisitions, he said.
"In the early days we didn't see any benefits to listing, but more recently, we have been looking for ways of growing the business," he said. "Acquisitions were our key driver. The other thing was to give existing shareholders the chance to take some of their equity out of the business."
itX initially flagged its acquisition plan in November 2005. It acquired security distributor, Dovetail, in February last year. "We looked at a few [acquisitions] and quickly realised that you could put as much effort into doing due diligence on a small acquisition as you would on a large one," Sellers said. "And a large one would have more effect on the bottom line. We thought to look at something bigger but we needed to go through the listing process first."
The main focus was to ensure margins remained healthy, he said.
Rather than go after volume, itX would seek more specialised or software-related businesses as well as those with a similar culture. Geography would also play a major role.
"We are very dominant in NSW so an acquisition in another state would be a sensible thing to do as it would give us a bigger footprint," Sellers said.
itX, formerly Alstom IT, was acquired by its local management team in 2004 in a management buyout from the Alstom Group. It had acquired the distribution business in 1989 from its original owner, GEC Australia.