Private equity firm RMB Corvest, in partnership with BEE investment vehicle Shalamuka Capital, has acquired a minority stake in Switch Telecom, a Voice over Internet Protocol (“VoIP”) telecommunications service provider.
Switch Telecom designs, develops, customises and maintains cost-effective fixed line voice services using VoIP technology for residential, corporate and wholesale clients principally in South Africa. Founded in 2006, the company offers its new shareholders an established business with a complete service offering.
The current transaction will see RMB Corvest, through Shalamuka Capital, acquire an effective 30% stake in the business, significantly strengthening the B-BBEE scorecard of the business.
“Rapid innovation in technology is impacting the telecoms arena, and we see this transaction as an opportunity to be part of the growth in the sector,” explains Shaun Cabrita, executive: RMB Corvest. “The reliance on older infrastructure, such as fixed line voice that relies on a traditional copper connection, is slowly decreasing. The trend towards VoIP subscriptions within fixed line voice subscriptions is expected to continue to grow and bodes well for the future growth of the business.”
Retention of the present skilled management team is of significance: CEO, Gregory Massel and managing director, Shannon Swanepoel, will remain with the business as majority shareholders. “We see the continued need for VoIP services from South Africans particularly in the light of the prevalence of hybrid working. Also, the business has full control over our network infrastructure and systems which means we are able to deploy new technology quickly, ensuring excellent service to our clients,” says Massel.
“Switch Telecom has a reputable and quality brand in the market, a strong track record of service excellence and the ability to supply customised solutions to clients. Additionally, Switch Telecom is also able to provide VoIP solutions on several types and providers of broadband connections, which means clients don’t have to change their existing internet connection or ISP, allowing for a seamless transition by reducing installation and waiting periods,” notes Andrew Sprenger, executive: RMB Corvest.
The business has a resilient, adaptable, diversified, and defensive product set. It is also easily scalable and is able to adjust for new customers and contracts with relative ease, allowing for growth without comprising on quality or customer satisfaction.
“With an experienced founding management team remaining invested in the business alongside us, in addition to the strong forecasted growth prospects in the sector – this promises to be a resilient and rewarding investment,” concludes Sprenger.
“This is a solid investment for Shalamuka Capital, both in terms of portfolio diversification, as well as good predictability of cash flows. We are excited about what the future holds with this investment” notes Fahmida Potgieter: director Shalamuka Capital.
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