South-African based IT services company AST Group has continued to build its presence in Australia, acquiring Oracle integrator Red Rock Consulting for between $10 million and $20 million.
The initial purchase is for $10 million, but could climb as high as $20 million if the Red Rock team are able to meet some aggressive revenue targets in the next three years.
Globally, the AST Group is a broad-based IT services company boasting skills in generic IT services, specific IT services for vertical industries, as well as outsourcing, ASP and hosting. It is the fourth-largest IT services company in South Africa.
Matie van Coller, executive director of AST Group's local operations, said the wholly owned Australian subsidiary hopes to soon mirror the depth of services its global operations provide. It has invested in management consulting skills with the $37 million acquisition of GEM Consulting and has established both an IT recruitment arm and a software reseller.
Van Coller said the company now boasts project management and system integration skills through the Red Rock acquisition. "In terms of the business model we envisage, Red Rock has the appropriate mix of skills, a good client base, a good management team and a good cultural fit."
There is likely to be more acquisitions in the near future as the AST Group grows its Australian operations, he said.
Van Coller said he was 100 per cent behind Oracle's software and believes there will be a raft of future opportunities providing services around the software. "Oracle was very supportive of the merger. It wants partners that are strong."
He is also very confident that demand for IT services is high, even though peers like Dimension Data are in the process of making staff redundant. "The IT services market has grown more predictably than the rest of the industry; it is less prone to cycles," he said. "It is also financed using the less discretionary parts of [an organisation's] budget."