Softec could make opportunistic acquisitions to expand offering

Author: Katka Krosnar

Source: mergermarket.com, March 19, 2021 (section Story)

Softec, a Slovak software and IT consultancy, could make opportunistic acquisitions that would help it expand its offering, CEO Peter Moravek told Mergermarket.

The company, whose EUR 30.5m 2020 revenue was up 24% year on year, is focusing on organic growth, Moravek said. However, is open to hearing pitches about potential targets, he said.

Possible acquisition candidates would likely generate up to EUR 3m-4m revenue, he said, and operate in the fields of big data, digitalisation, artificial intelligence and cloud services, for example. These are strong potential growth areas for Softec and acquisitions could bring additional competences or new services, he said, or could partner with other companies as an alternative to M&A.

Softec could look selectively at targets in its ten existing central and south-east European markets, Moravek said, but does not expect to make acquisitions to enter new countries as it sees enough growth potential in these markets.

The company is not in talks with potential targets at present, is not actively seeking targets, and does not expect to mandate advisers, he said.

The COVID-19 pandemic has accelerated Softec’s growth by prompting higher demand from companies for digital transformation and onboarding, particularly in the financial services and telecom sectors, he said. Lockdown measures drove companies to focus more on online ways of contacting and acquiring clients, including more use of cloud services, he added.

Mobile and online ways to acquire, serve and communicate, such as video calls, have increasingly replaced in-person meetings, he said, adding that contact centres are increasingly using tools including chat and voice bots, and that companies have also been investing in digital back-office transformation.

Increasing consolidation in the financial sector in Central Europe also brought Softec more work, as banks and insurance companies had to merge their separate systems and processes, he said.

Mergermarket reported in March 2018, citing Moravek, that Softec could make opportunistic acquisitions. However, since then, the company has focused on organic growth and has not looked at any targets, he said.

Softec acquired Slovak peer Centaur in 2008, which helped it expand in the telecom segment, as reported. Centaur has around 50 employees, Moravek said in 2018.

The company receives several approaches a year from interested investors but is not planning a sale or external financing, Moravek said. It is owned by seven individuals including Moravek, five of whom are active in the company´s management.

Softec is a consultancy and software company servicing clients in ten countries across Central and Eastern Europe. Its offering includes design and development of complex IT solutions, systems integration, IT and business consulting and outsourcing, for key customers including insurers VIG [VI:VIG] and Generali [BIT:G], banking groups Raiffeisen Bank [VI:RBI] and KBC [BR:KBC], and telecom company Orange [PA:ORAN].

Slovakia accounts for around 60% of its revenues and Softec sees huge potential to grow in existing markets including the Czech Republic, Poland, Hungary, Serbia, Croatia, Montenegro and Austria, Moravek said. It has offices in Bratislava, Zilina and Prievidza in Slovakia; and in Prague in the Czech Republic.

The company wants to significantly increase its investment into offering new services and competencies, including hiring more people, he said. It has 390 employees at present. With close to half of staff continuing to work from home, Softec will move its Bratislava headquarters to new, smaller offices within a new ecological building in early June, Moravek said.

Softec was founded in 1990.

by Katka Krosnar in Prague