DVT Holdings, one of South Africa's fastest growing software specialists, has concluded a transaction with Cornastone Technology Holdings, in terms of which Cornastone acquires 28.5% stake in DVT for R4.5 million in cash, the balance being held by the company's founders and other management.
At the same time, DVT has restructured, creating a holding company that now owns both DVT's well-established business in Cape Town and its burgeoning Gauteng operation.
Hamilton Ratshefola, CEO of Cornastone Consulting, and Jackson Maogale, managing executive of Cornastone, join the board of DVT, while Derek Hughes has been appointed as DVT Group CEO.
DVT has enjoyed seven years of rapid growth, accelerating since launching its Gauteng operation in 2004, which has enjoyed 300% annual growth under the direction of Hughes.
"Cornastone makes the perfect partner for us," says Hughes. "Not only are our offerings and services wholly complementary, but we also have strong personal relationships at executive level. We have previously worked together for several years prior to the establishment of either DVT or Cornastone. Our counterparts at Cornastone epitomise the same entrepreneurial business spirit that characterises DVT. We have both grown significant companies from scratch, entirely organically and without external investment."
"We had three companies from which to choose, and DVT provided us with the best strategic fit. It was very attractive for us as an investment vehicle," says Ratshefola. "We lacked application development and Microsoft skills, which are in strong demand in the market. We had the option of creating our own development and Microsoft competencies, or buying into a specialist. DVT happily satisfies our requirements, and opens many opportunities for both companies."
Cornastone and DVT have been doing joint business for nearly a year, so this is an extension of an existing successful working relationship between the two companies. Cornastone has identified a number of candidates for additional joint business, notably in the water provision market, where the company is a leader. Specific opportunities include outsourcing and integration projects.
Privately held, black-owned Cornastone was formed in 1999 by Lufuno Nevhutalu and Ratshefola, two experienced IT practitioners with strong entrepreneurial backgrounds and outstanding track records of success. Its partners include HP, IBM, CA and SAP. Its clients include the public sector, financial services organisations and telcos. Its most recent turnover was R155 million, with R22 million profit before tax. The company has grown entirely organically over the last seven years, and is now looking to acquisitions to maintain its growth curve. DVT is a software specialist which focuses its development competence on Microsoft technologies and is a Microsoft Gold Certified Partner. In addition, it services the corporate market with development skills, is the local Replicon distributor, a Metastorm Alliance Partner and owns the Radical service management product suite.
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