Software Futures sold for R12.2m

By Kimberly Guest for Software Futures
Johannesburg, 24 Jul 2007

JSE-listed IT company Faritec has signed a deal with the curators of defunct Fidentia to acquire Software Futures for R12.2 million, ITWeb can exclusively report.

The High Court placed Software Futures' parent company Fidentia under curatorship in February. The Financial Services Board (FSB) initiated the move as it investigated allegations of financial mismanagement.

It is now believed that at least R1 billion of investor funds is missing. Proceeds from the sale of companies within the group - including Software Futures - will be used to compensate these losses.

In May, curators Dines Gihwala and George Papadakis sold Software Futures' consulting arm to IndigoCube in what was essentially a past and present management buyout. The value of that transaction was not disclosed.

On the move

Now Faritec and the 85 Software Futures employees are awaiting approval of the deal by the FSB and the Competition Commission, says Faritec executive for the Gauteng region Gordon Love.

"At the moment, we are assuming these approvals will be more of a formality than anything else. In terms of the curators, the contract has been signed and the terms agreed. We are busy dealing with the employee contract. However, until the deal has been approved, we won't be able to integrate that business into our own," he explains.

Love says the company has secured the support of Software Futures' management team and will move the entire company to Faritec's Cape Town offices.

Once the deal is approved, Faritec will be the fifth company to own the software development house co-founded by Aletha Ling, of Computer Configurations Holdings (CCH) and MGX fame.

In 1998, the company was acquired by CCH and renamed CCH Software Development. Two years later, the MGX Group acquired the CCH Group and, with it, CCH Software Development, resulting in a name change back to Software Futures.

In 2003, the Brown Brother Holdings acquired a 49% interest in Software Futures, while Kopano Ke Matla, the investment arm of union body Cosatu, acquired a 51% interest. The total value of the sale was R20 million. Brown Brother Holdings subsequently changed its name to Fidentia.

Last year, Fidentia bought out the remaining 51% interest in Software Futures.

Earlier this month, Faritec CEO Simon Tomlinson said he expected the acquisition to enhance Faritec's earnings in the 2008 financial year, increase the company's skills level and boost its presence in the Western Cape.