Comparex Holdings was singled out in a recent Times article as one of the wave of South African companies trying to make it in Europe after the end of apartheid. Comparex is a South African-owned IT group specializing in server sales and network integration services. The large part of its business is located in Europe.
The group formed from the acquisitions of Persetel Q Data Holdings Ltd, South Africa’s largest IT company. Looking to escape the declining South African currency, PQ set its ambitions of making at least 80% of its revenues overseas. In 1996 the company acquired 40% of Comparex Informationsysteme GmbH, Hitachi’s European distributor, which had been owned by German chemicals giant BASF.
Turning its attention to the network integration services market, the group spread its grasp across Europe, snapping up Telemation, Comtech, Nomea, Transfer SA, and Datalec, in Germany, Belgium, France, France and Switzerland respectively. It also bought data security specialist Kryptokom and internet directory services firm Sornet GmbH, both of Germany, for good measure. The group also purchased the European division of US firm Anixter Communications Inc, including branches in the UK, Holland, Italy, Ireland, Spain and Sweden.
With its European empire firmly established, the group then increased its stake in Comparex to 75% (leaving BASF with 25%) and rebranded itself around the Comparex name. Now, only the African arm of the corporation is still known as Persetel Q Data Africa. This subsidiary is owned 50% plus one share by National IT Acquisition Consortium (NITAC), a black empowerment group set up after the fall of apartheid.
Comparex makes a total of 65% of its revenues from providing services; 34% of revenues are from sales of and support for IBM, Data General and Hitachi mainframe and mid-range server products. Of the services arm, 23% is made up of consultancy, with about 3,000 consultants globally. The consultancy business currently focuses on Y2K issues, but the company hope to retrain its staff in the enterprise resource planning fields before Y2K passes.
Network integration is Comparex’s core business, making 42% of its revenues. Each of the various European subsidiaries bring slightly different skills to the group. Nomea provides services including network consulting, outsourcing and software integration. Telemation provides a third of Cisco’s German sales. Comtech is a network integrator. Datalec engineers LAN/WAN communications networks.
The company reported net income for the year ended May 31 1998 of 1.93bn rand ($313.4m using the March 10 1999 rate of 16 cents to the rand) on revenues of 4.25bn rand ($689.7m). For the first half of fiscal 1999, the six months to November 30 1998, its revenue had hit 3.57bn rand ($580m), a 166% rise on the same half 1998. Net income stood at 267m rand ($43.5m). The directors warned that these results did not necessarily mean the second half would follow suit, but that it would hit its target of a 50% rise in earnings per share.
The groups strategy is still euro-centric, it still wants to build a pan-european network integration organization. It currently has its eyes on second listings in London, and possibly also Frankfurt. It will also attempt to balance its three areas of business so each accounts for a third of revenues. Further acquisitions seem likely. The group also intends to increase its efforts in the field of e-commerce, which currently only accounts for 1% of its revenues.
