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AdEPT aims to raise millions to fund acquisitions

Managed service player is looking to raise millions with a share placing to provide more resources for its acquisition strategy

Managed services player AdEPT Technology has proposed a share placing to raise £4m that could fuel further acquisitions.

It plans to place as many as 1.24 million new ordinary shares at a price of 320p per placing share to raise the funds.

An update to the markets this morning made it clear that some of the money could be used to fund acquisitions.

AdEPT seems to be following a pattern of buying a business each year. Last April it splashed out for Advanced Computer Systems, in 2018 it picked up ETS and the year before that swooped for Atomwide.

“Net proceeds of the placing and subscription will be used in support of the company’s stated strategy to reduce indebtedness, finance potential acquisition opportunities, accelerate Project Fusion ‘One AdEPT’ and for ongoing working capital requirements,” it said.

“Alongside the delivery of long-term, sustainable organic growth, the board believes that selective acquisitions will continue to provide an expedited route to growth. This may be to accelerate product and technology capability and/or broaden AdEPT's geographic footprint. Any acquisition activity would be judged against defined strategic, operational, financial and cultural criteria before being considered for further investigation.”

The statement said AdEPT’s management team felt there were “significant opportunity and value to be found in the highly fragmented UK managed services sector” that it could take advantage of.

“There is continuous evaluation of potential strategic acquisitions which should complement the existing business while adding shareholder value,” it added.

The share placing also gives AdEPT an opportunity to update investors on the progress it has made and its ongoing strategy to become a “one-stop” supplier of IT and comms infrastructure and services.

Six strategic areas

AdEPT’s strategy is based on these key planks:

  • Customers – Project Fusion should improve range of the support it can provide.
  • Partners – looking to evolve strong relationships.
  • Enhancing intellectual property – with the AdEPT Education Suite and AdEPT Nebula.
  • Building on market expertise.
  • Frameworks – gaining approved supplier status on government procurement frameworks.
  • Acquisitions – acquiring complementary businesses that either increase economies of scale or broaden the proposition that can be delivered to customers.

As well as acquisitions, the business is determined to drive organic growth and there have been efforts to focus on larger opportunities and make sure that it has the capability to win new and retain existing customers. The business has also worked on its supplier relationships and moved to get itself included on some public sector frameworks.

AdEPT is also trying to keep a close eye on its finances and there are high hopes around the decision to bring together its different group operations into a single platform, known as Project Fusion, which will work across sales, marketing, internal systems and brand development.

In its most recent interim results for the six months ended 30 September, revenues increase by 26% to £30.8m, largely driven by the acquisition of Advanced Computer Systems Group. Profits after tax also grew by 4% to reach £3.9m.

The fiscal year ends on 31 March and the full-year numbers will be available in July.

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