Systems Limited to acquire NdcTech
The said deal is likely to help Systems Limited upsell and cross-sell to its existing customers in the financial sector
May 31, 2022
KARACHI: Systems Limited and its wholly-owned subsidiary in Singapore, Systems Internal IT Private Limited are gearing up to enter into a shares purchase agreement with NdcTech comprising of National Data Consultant Private Limited, NDCTECH APAC Private Limited Singapore and National Data Consultancy FZC for the acquisition of 100% shares of NdcTech.
In a notice sent to Pakistan Stock Exchange (PSX) a day earlier, the board of directors of the company made the announcement.
According to Topline Securities, the size of the deal is approximately $35 million and the acquisition will be against consideration of $10 million plus Rs5.07 billion payable by the company partially in cash (Rs346 million) and partially in kind by way of issuance of 11.82 million new shares of the company to the sellers of NdcTech at Rs400 per share subject to all necessary shareholder and regulatory approvals.
"We believe that this issue of shares may be through other than Right issue as per the ‘further issue of shares regulations, 2020’," Topline Securities said.
NdcTech is a leading core and digital banking implementation service provider, along with its subsidiaries/associated companies in UAE and Singapore. It offers core modernisation, digital banking services, managed services, banking on the cloud, and consulting services.
It is a regional partner of Temenos, which has over 3,000 financial institutions across the globe, including 41 of the world’s top 50 banks. Temenos is recognised by renowned firms such as Gartner, Forrester, IBS Intelligence, Everest Group and Fintech Futures as a Leader in their respective quadrants.
"The said deal is likely to help Systems Limited upsell and cross-sell to its existing customers in the financial sector and to NdcTech customers as well," the brokerage house noted.
However, it clarified that as the company has not yet disclosed the financial numbers and what synergies Systems Limited will achieve from this acquisition, it is too early to make an assessment of its impact on Systems Limited's future earnings.
Systems Limited is currently trading at a 2022 price-earnings ratio (P/E) of 16x and price-to-sales (P/S) of 4x and we maintain our ‘buy’ rating on the stock.
