Capital Appreciation (CTA), a financial technology group, has announced plans to acquire Dariel, a software engineering firm based in South Africa that specializes in providing software solutions for financial institutions and fintech companies.
The acquisition is worth a total of R85.3 million ($7.2 million) and will be paid through a combination of cash and shares. CTA will pay R46.9 million ($4 million) in cash and allot 25,243,779 CTA shares from the company’s treasury shares, which are valued at R38.4 million ($3.2 million).
In a statement released on the Johannesburg Stock Exchange, CTA explained that the acquisition of Dariel is consistent with the company’s philosophy of investing in established, asset-light companies that deliver innovative fintech solutions to institutional clients. CTA believes that the digital transformation, along with the increasing demand for electronic payments, cloud services, and related solutions, will continue to support robust industry growth prospects over the medium term.
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CTA’s acquisition of Dariel is subject to certain conditions, including approval by the Competition Commission. If the transaction is completed successfully, Dariel will become a part of CTA’s software division.
Dariel is a South African IT software services provider that was founded in 2001. The company provides software solutions, consulting, development, implementation, integration services, and maintenance and support to enterprises. Dariel’s participation in initiatives that are responsive to current industry trends makes it an attractive target for CTA, as the acquisition provides the financial technology group with further growth potential and investment opportunities to broaden its portfolio of services.
Here is the strategic importance of the acquisition of Dariel for CTA:
- Expansion of CTA’s portfolio: By acquiring Dariel, CTA is expanding its portfolio of services in the financial technology industry. Dariel’s software engineering expertise will complement CTA’s existing offerings, allowing the company to provide a wider range of innovative solutions to its clients.
- Access to new markets: Dariel has a strong focus on financial institutions and fintech companies. This acquisition will allow CTA to expand its reach into these markets, providing new opportunities for growth and development.
- Synergies between companies: Dariel’s participation in initiatives that are responsive to current industry trends, such as digital transformation and electronic payments, aligns with CTA’s own philosophy of investing in asset-light companies that deliver innovative fintech solutions to institutional clients. This alignment creates potential synergies between the two companies that could lead to new and more profitable business opportunities.
- Increase in growth potential: The acquisition of Dariel provides CTA with further growth potential in the financial technology industry. With the increasing demand for electronic payments, cloud services, and related solutions, CTA believes that the industry will continue to grow over the medium term. The acquisition of Dariel will help CTA take advantage of this growth potential.
- Strengthening of CTA’s software division: Upon completion of the transaction, Dariel will become a part of CTA’s software division. This will strengthen CTA’s position in the market as a provider of innovative and disruptive fintech solutions to institutional clients, allowing the company to better serve its existing clients while also attracting new ones.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard