CloudCoCo, a UK provider of IT and communications solutions to businesses and public sector organisations, has announced the proposed acquisition of the entire issued share capital of Systems Assurance Limited (‘Systems Assurance’), an IT group comprising a B2B value-added reseller (VAR) and an automated cloud-based VAR and IT managed service provider, and a proposed fundraising of £2.1 million before expenses through a conditional Placing.
- The net consideration for the Acquisition is £0.83m in cash (£1.58m gross), subject to adjustment, and the grant of warrants over four million Ordinary Shares
- Systems Assurance is an IT group comprising a B2B VAR and an automated cloud-based VAR and IT managed service provider
- For the year to 31 December 2020, unaudited results showed Systems Assurance generated revenue of £6,093,000 and an adjusted EBITDA of £209,000
- Systems Assurance introduces a proven and scalable hardware engine into CloudCoCo’s existing business as well as expanding its IT Managed Service offering, which will help increase operational efficiency and drive margins
- The e-commerce division of Systems Assurance will increase the purchasing power of the Enlarged Group and broaden its product range, as well as streamline its current processes and offer greater efficiency and margin accretion through automation
- The proposed Acquisition will increase CloudCoCo’s customer base and provide the opportunity for cross-selling and upselling of its services
- The Acquisition signals the start of the Company’s ‘Get Bigger’ phase, both organically and through acquisition, to provide scale to the business. It follows the successful completion of ‘Get Well’ and ‘Get Fit’ phases
- CloudCoCo has raised £2.1 million before expenses through a conditional Placing arranged by Allenby Capital of 210,000,000 new Ordinary Shares at a price of 1 penny per share
- The Placing will fully fund the Acquisition of Systems Assurance
- The Placing will also provide additional working capital to fund integration of the Acquisition and will also provide headroom that could be used to fund further acquisitions
- The Placing was carried out at an approximate 13 per cent. discount to the Company’s closing price of 1.15p per share on Monday 16 August2021
Mark Halpin, Chief Executive of CloudCoCo, said: “This Placing and Acquisition is set to be a transformative step forwards for CloudCoCo. It sees us progress to the next stage in our development – ‘Get Bigger’ – which will see us focus on scaling the business while winning larger and longer contracts.
“I would like to welcome the Systems Assurance team to the fold. They bring with them fantastic technology and an impressive customer base that not only complement the existing CloudCoCo business but will help unlock its potential through driving substantial efficiency gains and introducing new cross-selling opportunities.
“I am grateful to all those who have joined us on our journey through the Placing. As well as making the Acquisition possible, it has given us the opportunity to strengthen our balance sheet while giving us headroom to explore further M&A activity – a key focus for the Group in the short-term.
“This is the start of an exciting new chapter in the CloudCoCo story and I look forward to reporting on further progress in due course.”