Silverbridge to the Altx

Silverbridge to the Altx

2006-10-17 08:31

Cape Town - Business application software supplier Silverbridge Holdings will list on the AltX on November 27 with a market capitalisation of around R60m following a reverse takeover of technology company Synergy Holdings (currently listed on the Development Capital Market).

An abridged listing document published on Tuesday showed that Synergy will acquire Silverbridge's operating company SDT by issuing 25m shares (consolidated on a 10-for-one basis) at 200c/share.

The new look company - in order to ensure a sufficient shareholder spread - will also place privately 2.35m shares at 200c/share.

The listing of Silverbridge will add to the already strong component of technology companies listed on the AltX - joining the likes of Datatpro, Simeka, Alliance Data, Zaptronix and ISA.

Back office administration

Silverbridge's SDT subsidiary specialises in providing propriety back office administration software solutions to the financial services industry (especially the long term assurance sector) in Africa.

SDT, which boasts Metropolitan International and Old Mutual Kenya as existing clients, has installed 22 client centres throughout Africa. Newer clients include RealPeople Lesotho Insurance Corporation, Alliance Lesotho and CFC Life Kenya.

Silverbridge has projected revenue of R53m and after tax profits of R7m (24c/share) for the financial year to end February 2007 - which suggests the envisaged private placement of 200c/share is being offered at a reasonable price (a forward price:earnings multiple of just eight times).

The 2008 financial year pencils in revenue of R64m and after tax profits of and revenue of R64m and after tax profits of R8.8m (27c/share).

New guise

Silverbridge, which did not present historical financial information in the revised listing document, said turnover of for 2007 was based on 40% projected annuity income (from rental and support) and 60% project revenue. For 2008 the company expected 50% of turnover would be annuity based.

Silverbridge earns its keep mainly through licence revenue fro its SDT Life and SDT Exergy products, implementation revenues, maintenance and rental revenue as well as consulting revenue.

Directors said Silverbridge had strong prospects for growth and increased profitability on the back of increased demand for locally developed software solutions (especially empowered companies), the continued growth in the financial services industry's requirements for next generation software and growth in the African market.

Punters appear to be enamored with Synergy's proposed new guise. The share is currently trading at 40c on the JSE - but this represents a massive premium on the private placement and transaction price of 200c/share considering the proposed 10-for-one consolidation of the shares as part of the envisaged restructuring prompted by the Silverbridge reverse takeover.