Cornastone seeks to buy

By Kimberly Guest for Cornastone
Johannesburg, 21 Nov 2007

Low-profile IT firm Cornastone is pursuing several acquisition opportunities, says CEO Hamilton Ratshefola.

The company has made three "strategic" investments through Cornastone Technology Investments since the beginning of last year.

These include a 51% stake in desktop solutions company CCS; a 24% stake in newly-listed application firm DVT; and a 60% investment in infrastructure start-up Cornastone Infrastructure Services.

The stakes, which cost Cornastone between R12 million and R13 million, are now worth around R60 million.

Building proficiency

Ratshefola says the company chose to invest its free cash flow into areas which Cornastone did not yet have a presence.

"We had a choice: we could pay out dividends or grow our business. We chose to grow our business. The investments we made provided us with opportunities to increase the breadth of solutions we are able to provide our customers. To date the strategy has worked very well in our favour," he says.

Now the investment arm is in discussions to acquire stakes in organisations that are vertically focused.

"These are companies which have specialised in providing - mostly software - solutions to key industry sectors. Our breadth, together with their insight, will facilitate a compelling offering to customers in those sectors," he explains.

Cornastone Technology Investments will have between R15 million and R20 million from the group`s operating profit to facilitate these purchases.

It is understood some discussions are already at an advanced stage, with announcements due in the first quarter of 2008.