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New private equity firm for tech
Wednesday, 04 July 2012 00:00
Written by Nicola Mawson
The former UCS group – which has become an investment holding company after delisting on 25 October – is getting set to secure capital to invest in start-up and more mature technology companies.
UCS, which has rebranded as Capital Eye Investments, left the bourse after selling the bulk of its business to Business Connexion early last year. The company felt its smaller size did not warrant the costs associated with being listed.
Capital Eye was formed last October and has already made three smaller investments, says CEO Dean Sparrow.
Capital Eye’s current focus is on retail, financial services and healthcare technology, as it already has experience in these sectors, he adds.
Sparrow says the group is looking at the next stage, which would be to raise capital to enable it to invest in consumer-related technologies in its current focus areas. He explains the company saw an opportunity in the South African market to start a private equity fund, because of the people, companies and knowledge in the sector.
Capital Eye will also play in the less mature venture capital space, but needs to balance its portfolio, as investing only in start-ups is too risky, says Sparrow. Currently, Capital Eye has investments in 12 companies, all of which are at various stages of maturity and many of which came out of UCS’s remaining business, he says.
Sparrow adds that Capital Eye does not want to be “boxed” into retail and will look to convergence within its core competencies, such as tie-ups between financial services and retail. The company already has a 51% stake in wiGroup, which provides mobile payment solutions.
The former UCS had about 2 500 staff, of which 800 went over to Capital Eye, while the balance joined Business Connexion after it bought Accsys, CEB Maintenance Africa, UCS Solutions, UCS Technology Services and UCS’s 70% stake in Destiny Electronic Commerce for R614 million.
Business Connexion has since sold the Destiny stake to VeriFone Singapore, a subsidiary of VeriFone Systems, for R255 million. UCS’s sale of the bulk of its business took it from a R1.5 billion company to one that turned over around R500 million, says Sparrow.
Sparrow explains that the company’s existing portfolio enables it to generate cash, which has allowed it to invest in three firms so far for between R5 million and R15 million each.
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