Adapt IT to buy Wisenet Group in Australasia expansion

January 9, 2019 Siyabonga Mtangana

JSE-listed Adapt IT is acquiring Australia’s Wisenet Group and Wisenet SG in a multimillion-rand deal that looks set to grow the South African software group’s presence in Australasia.

The Wisenet Group was founded in 1997 and is headquartered in Melbourne, with regional offices in New Zealand and Singapore. It provides “software-as-a-service learning relationship management system” to vocational training institutions called Registered Training Organisations. It has an 11% share of the Australian market and similar market share in its other territories.

Adapt IT will pay S$2.9-million (about R30-million) in cash (less any applicable purchase price adjustments in terms of the agreements) for Wisenet Group. It will fork out $2.3-million in cash (about R24-million) for Wisenet SG upfront, plus it will pay annual amounts up to 2021 should Wisenet SG meet certain operational earnings targets.

The Wisenet SG acquisition will include an additional payment, calculated using a “predetermined formula”, should Adapt IT — “or any related body” controlled by Adapt IT — be “granted admission to the official list” of the Australian Securities Exchange (ASX) and its shares become “capable of being traded on the market operated by ASX”.

The maximum purchase consideration pertaining to Wisenet SG is S$17.1-million (R176-million) if there is no ASX listing consideration payment, or S$21,1-million (R218-million) if there is.

“The ASX listing consideration payment was included at the request of the sellers, and shareholders are advised that the board does not intend to seek admission for Adapt IT or any related body corporate controlled by Adapt IT to the official list of ASX,” Adapt IT said in a statement to shareholders on Wednesday.

Proprietary software

“The acquisition will complement Adapt IT’s education division’s growth strategy and provide Adapt IT with access to key proprietary software, customers and markets in the higher education sector in Australia,” it said.

Wisenet is a software-based business that develops its own intellectual property and has an annuity-based revenue model where software-as-a-service subscriptions account for 90% of the total revenue. “All revenue is earned outside of South Africa in hard currencies.”

The revenue attributable to the net assets to be acquired was S$4-million as of 30 June 2018, while the profit after tax was S$301 408.