Datatec aims for listing on London exchange

Datatec aims for listing on London exchange

South African IT company Datatec is planning an offering on the London Stock Exchange (LSE) with the goal of raising $US200 million. "We want to be rated on an exchange where our competitors are and we want to attract an international investor base," said Jens Montanana, Datatec chairman in a statement announcing the company's plans.

Datatec is also gearing up to offer its shares on the Nasdaq market by June or July.

The listing on the LSE will enable Datatec to expand its European operations. A Datatec subsidiary will be listed, in which Datatec will retain an 80 per cent stake, the release said.

Datatec has found that its revenues are chiefly generated overseas: it gets barely 8 per cent of revenues from South Africa.

With funds brought in by the stock offering, the company also plans to develop UK-based networking technology business Mason Group, in which it recently acquired a 75 per cent stake. It will also consolidate the market position of its E-Services division, a London subsidiary based on Datatec's 1998 acquisition of Logical Networks PLC, which plans, builds and installs e-commerce technologies.

The pending LSE listing for September is still subject to the approval of the South African Reserve Bank and the Johannesburg Stock Exchange. The listing brokers have however completed all groundwork, according to Datatec's statement.

Meanwhile, niche networking distribution division Westcon is looking to increase its contribution to Datatec's bottom line.

Executives report Datatec will be worth $US2 billion this year, with 93 per cent of its business conducted outside South Africa.

According to Datatec's South African director of marketing and strategy, Jonathan Newman, Westcon itself will be worth $US2 billion in its own right within a year, securing its future by leveraging its niche focus in an overcrowded market focused on broad-based distribution. Westcon is now positioning itself as a true value-added distributor in the local market to take control of the network integration functions typically executed by integrators. "VARs will not need the integration skills they once had," he said.

However, he is quick to explain the strategy is in response to customer demand for value-added services and support, rather than commoditised product drop and installation services.

"We're not cutting them out, we're reintermediating ourselves and our VARs," he said, explaining many VARs have already been forced to change their business.

Datatec's Logical division is also diverting from its traditional integration roots to become focused on e-services.

This will see it move away from direct competition with local competitors Dimension Data and Comparex company PQ Networks, a division of local IT giant PQ Africa. "We are really saying our whole business will be that e-business chain," said Newman.

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