TECH Pacific chief Tony Butler is reassuring the channel that a planned share sale in its parent company would not harm the distributor’s New Zealand operations.
Such a sale has been “long-speculated”, he says. But what matters more is the stability of the operation, ensured by a “significant” management stake in the company.
Last week, the Singapore-based Tech Pacific Holdings confirmed it is “actively exploring” a public offering on the Australian Stock Exchange (ASX), possibly by the end of the year.
Although plans are still in the early stages, CEO Shailendra Gupta told Sydney-based Computer Reseller News that the ASX listing of the $3 billion Asia-Pacific IT distribution business would allow its private equity investors “an opportunity to realise some return on their investment”.
The potential float follows last year’s takeover by CVC Asia-Pacific, a wholly-owned subsidiary of Netherlands-based CVC Capital Partners. CVC paid Dutch company Hagemeyer $US235 million for 58.5% of the business, leaving Hagemeyer with 31.5% and management with 10%.
CVC Asia-Pacific had earlier tried but failed to buy Tech Pacific from Hagemeyer in 2001, which itself had bought the distributor in 1997.
Butler told Reseller News that he had not yet been informed of the planned share float, but he expected he would be when it was official.
Venture capitalists are always “exploring their options”, he says, but the 10% of the business owned by management “ensures its stability”.
Following the 2003 sale, more than 60 of 77 Tech Pacific managers across the Asia-Pacific invested in the business, including Butler and six others in New Zealand.
Some managers re-mortgaged their houses; “my investment is significant compared to the value of my house”, Butler says.
Tech Pacific Holdings is reportedly talking to investment bank UBS about a share float. Gupta says that the IT market is healthy and the float will give it the resources to fund its growth. Tech Pacific operates in eight countries, employing 1500 staff and distributing tens of thousands of products.
Australian turnover is currently $1.4 billion, up 23% on last year, with the distributor claiming even faster growth in some Asian countries.
Tech Pacific New Zealand is faring less well, losing some agencies and restructuring six months ago, but Butler says the business is in fine shape.
Turnover in 2003 was $412 million (down $4 million from 2002) but the business has enjoyed compound annual growth of 30% a year since 1992, compared with an average industry growth of 10% a year, Butler told Reseller News last month.