Dimension Data raised £60.2m in a new share issue yesterday to help buy out the minorities of its Asian subsidiary, Datacraft. But the placing, equivalent to eight per cent of the newly enlarged share capital, has left two investors with very big stakes in the multinational reseller.
Luckily for DiData, the issue was fully underwritten at 44.5p - only about a quarter of the 136,121,909 new shares up for grabs were placed with institutional investors. And one investor, R&V, a subsidiary of Venfin Ltd, took up a whopping 29,014,009 Placing Shares. This left 3.6 million shares to be divvied up among all other takers. The underwriters, Venfin and Allan Gray, took up 103,507,900 Placing Shares, leaving them with 25.4 per cent and 23.1 per cent stakes in the company.
So, DiData is effectively controlled by two South African financial institutions. We assume it is relaxed about this ménage à trois. DiData may be quoted in London, but it sprang out of South Africa and it retains a listing on the Johannesburg Stock Exchange. So it is probably all very cosy.
Let's turn to Datacraft. DiData has held a majority stake in this Singapore listed company for 10 years. It is paying $276m cash to buy out the 46 per cent of the company that it does not already own. This is a 29 per cent premium on the closing price on the day before the buy-out was announced.
Piper Jaffrey likes the deal. It estimates that full control of Datacraft will add 4.5 per cent EPS (earnings per share) and is accretive to FY09E and FY10E. UK-based analysts of the US investment bank seem to like the company, too: in a note yesterday they said the Datacraft buyout "suggests Dimension Data will remain disciplined on M&A. Dimension Data has shied away from large-scale M&A since the 2003 management change, preferring small bolt-ons. This deal exhausts Dimension Data's M&A gunpowder for now, suggesting management will remain focused on continuing to deliver the impressive organic growth seen in recent years."