Some weeks before Christmas, The Huge Group, with an impressive profits record and very smart management, announced their biggest-ever deal.
For a small-cap company then worth about R650m, to raise R300m in new capital to buy another company that they knew well was indeed a big deal.
The acquisition fitted exactly into their existing business. Any way you look at it, it was a big and clever transaction in this current economic climate.
Here’s the deal with ConnectNet:
Huge, a voice services business, will now have the advantage of merging its market potential hand in glove with a data services business, ConnectNet, renowned for providing a solid platform in the connectivity world.
Its services are accredited by all the major banks in South Africa.
Huge’s voice services can be sold to ConnectNet’s 29 000 customers, most of which fit the profile of a Huge customer. An observable gap for Huge has been the provision of data services to its 13 000 customers - and now it can fill that gap.
Only problem was, the money had to be raised. We all sat and waited with half an eye open for the announcement.
This week it came. A SENS announcement beated out the drum...
Very rarely are a large chunk of shares sold before the book building process gathers pace. But for Huge, the investment attraction was so good that all the shares were sold prior to the book building process getting established.
Shareholders are advised that the initial interest shown by qualifying investors was at a level which has resulted in all of the available shares in terms of the Specific Authority being allocated prior to the commencement of the book building process.
Praesidium Capital Management’s Mike Beamish said, "This is only the beginning for Huge group. The Directors have some really ambitious plans for the business going forward and they have the necessary skills capacity to grow this into a really big company, Huge actually!"
Jeremy Woods trained for three years as a journalist on the Herts Advertiser, St Albans, in the U.K. Once qualified, he left England to work as a crime reporter on the Vancouver Sun in Canada. After three years, he worked for the Los Angeles Times as a trainee financial journalist, spending most of his time reading company accounts and finding publishable stories in them. He moved to South Africa and for the last five years in journalism worked for the Sunday Times, Business Times, as Investment Editor. He has also published a financial thriller called "Special Payments", which was a best-seller on publication, and optioned three times for a film.