$16m cash injection a boon for Readify
16 million reasons to smile: Graeme Strange, Readify's managing director. Photo: Mark Leopold
Graeme Strange had a fast-growing IT services business turning over $23 million a year and some global gongs, but what the Readify managing director didn't have was time on his side.
Until this week, the Melbourne-based software developer, with offices on the east coast and in Perth, relied on revenues from blue-chip clients to fund growth. That has now changed with a $16 million injection by the private equity division of ASX-listed funds manager Blue Sky Alternative Investments.
Mr Strange, who retains a quarter of the business, said the money came at the right time. It will go towards nearly doubling staff to 350 over the next three years. A further $10 million will be available to fund acquisitions.
"While we felt we could execute on the plan out of cash flow, it would take a lot longer than if we had funds to accelerate those plans," he said. "We saw the opportunity to extend through acquisitions and I'll be targeting the smaller, nimble, high-quality organisations.''
Mr Strange said a sharemarket float was also a consideration. ''Let's get to a position where we could list and then make a decision that it makes sense to list."
Over the next 100 days, the partners will bed in the new board and start looking at potential takeover targets. Russell Yardley, the man who introduced the parties, will stay on as non-executive chairman with a 1.7 per cent stake. The 35-year ICT veteran, entrepreneur and philanthropist is also non-executive chairman of Adelaide-based health informatics company Alcidion.
Readify is the second software investment for Blue Sky, which took a $3 million stake in Alcidion in 2012.
Mr Strange said Readify had rejected half a dozen approaches from big IT services providers because they weren't committed to the quality culture he had instilled in the business. "I wasn't just interested in the money, I was interested in the expertise and contacts that could come with such an investment.," he said.
"A trade sale was something the board had discussed at length. Whilst it's enticing to get big enough to be annoying, the reality is we have a unique culture creating a high-quality software services organisation.
"A lot of organisations have objectives to provide returns to shareholders and beyond that they don't seem to care.
''It was very hard to make the cultural or strategy fit with those organisations. The more I found out about them the less I liked about that option."
Mr Strange said Readify was committed to hiring "super geeks". Such talent allowed Readify teams to be four times more productive than offshore rivals, he said.
Victorian Technology Minister Gordon Rich-Phillips praised the deal that would create 50 jobs in Readify's home state.
"This is great news for this vibrant and growing company and further evidence of Victoria's ability to foster great businesses and attract investment," Mr Rich-Phillips said.
Readify was awarded Microsoft's top global partner in 2012 and country partner of the year in 2013. It counts iiNet, Rio Tinto, Seek and Australia Post as well as government agencies among its customers.
The company will also add 100 jobs in other states. It wants to take on platform-as-a-service providers, as it combines bespoke software development for mobility, cloud and data with Microsoft's Windows 8, Office 365 and SharePoint.