South African IT consulting and management company Advanced Software Technologies (AST) Group has signalled its intention to muscle in on the Australian IT consulting market, with the acquisition of Australian boutique advisory firm Poynton and Partners Group (P&P) for $34 million in cash.
Under the terms of the agreement, the advisory and private equity company P&P Group - and its management consulting subsidiary GEM Consulting, will retain its existing management structure under chairman John Poynton, with up to two senior AST executives joining the board.
The merger signals a more strategic move into IT consulting for the largely business policy and management consultancy, claims P&P's Mark Barnaba, who has been appointed managing director as a result of the acquisition.
Barnaba said the consultancy was identified six months ago by the AST Group as a potential acquisition, before the two exchanged contracts this month.
"A lot of the details of the contract still have to be finalised regarding how many staff [from AST] are coming over to live in Australia. But the important thing is that we won't have to compromise our autonomy or independence."
The P&P Group will maintain its name and branding for both P&P and GEM Consulting, said Barnaba, where GEM Consulting will fall under AST's global consulting division dubbed Bentley West. P&P in turn will bolster AST's interests in corporate advising and equity work.
The decision to merge with AST Group claims Barnaba, who is one of P&P's four founding partners, was based on an "attractive price", while enabling the Australian company to offer its clients international coverage.
"We have seven of the top 30 Australian companies by market share as clients, so most of our customers are international businesses. This acquisition allows us to bring international opportunities to these clients."
P&P Group operates across a number of vertical markets including mining, transport, finance and e-commerce and Barnaba said the company is not itching to see what its $34 million injection can do just yet.
"No we're not looking at any local acquisitions for the time being. We have some targets to meet over the next few months, before we concentrate on anything like that, but it's a good position be in," said Barnaba.
Commenting on the acquisition was P&P's John Poynton, who claimed the deal gives P&P a consulting breadth and the chance to go global much faster than its current growth rate would allow.
"The AST Group link-up now gives us two further key points of advantage. It provides us with a world-class overlay in IT which is increasingly a critical capability in our existing management consulting and corporate advisory businesses," said Poynton in a company statement. "AST Group also gives us the capacity to build our business internationally far quicker than we would have through organic growth, and without any compromise on the independence of the advice we give to our clients."
On the other hand, AST Group intends to use the acquisition as a major springboard into the Australian market. The company is a major player in the South African market, with a turnover of around $250 million.
AST Group executive chairman Gerrie de Klerk claims the purchase is AST's most significant offshore acquisition to date.