Novo Tellus seeks control of Singapore-listed Procurri

A consortium led by the private equity firm has offered to buy 82.1 million shares in Procurri for S$0.365 apiece in cash, according to a filing. This would take its interest in the company from 23.1% to 51%. Other consortium members include Compass Private Investments. Senior executives at Procurri have agreed to tender 17.3 million shares, or half their current holding.

This offer represents a 32.7% premium to the March 10 closing price. Trading in the stock was halted on March 11. It resumed on March 15 and posted a 15.25% gain to close at S$0.34.

Founded in 2009, Procurri provides IT services and data center equipment, acting as a global aggregator for businesses to purchase, dispose and manage the lifecycle of enterprise hardware. This includes maintenance, leasing, and rental. It operates in over 100 countries through a network of 21 offices.

Novo Tellus’ initial investment in 2019 involved the purchase of shares from DeClout Group, which acquired a majority stake in Procurri in 2013 and took it public three years later. Rationalizing the assumption of control, the consortium noted that Procurri faces a challenging transition, with limited revenue visibility and large investments needed to generate future growth. Earnings are likely to be depressed and dividends may not be forthcoming in the next few years, it added.

“The partial offer will allow the offeror and its lead investor Novo Tellus to take a more active role in working with Procurri management to build long-term value in the coming years and navigate the real short-term challenges the business faces. For Procurri shareholders, they have a choice to realize value at an attractive premium,” said Keith Toh, a partner at Novo Tellus, in a statement.

Procurri posted revenue of S$233.5 million ($174 million) in 2020, up 5.5% year-on-year, while EBITDA fell 25.6% to S$12.9 million and net profit dropped 28.6% to S$2.69 million. This was partly a result of COVID-19 disrupting data center and IT budgets, the company said in its annual report. It warned that the outlook remained uncertain.

At the same time, the pandemic has forced businesses of all kinds to shift services online, which will lead to increased demand for data centers and related equipment and services. Procurri has responded by restructuring its global operations to function on data-centric platforms like Salesforce for maintenance and Morse for IT asset disposition and recycling and hardware resale.

Other initiatives include: making its hardware resale, third-party maintenance, and asset disposition more integrated to provide a data-driven global platform that provides end-to-end solutions; and acquiring customers at low cost through hardware resales and then moving them up the value chain towards complete business solution packages.

Citing third-party research, the company expects global managed IT services to reach $249 billion in 2030, up from $145 billion in 2017. Meanwhile, global cloud infrastructure will rise from $73 billion in 2019 to $166.6 billion in 2024 and IT asset disposition to grow from $13.2 billion in 2018 to $24.9 billion in 2026.

The investment comes from Novo Tellus’ second fund, which closed at $250 million late last year, beating a target of $175 million. LPs include pension funds, endowments and foundations, and sovereign wealth funds, most of them based in the US and Asia. The firm raised $25 million for its debut fund but co-investment took the overall deployment to $200 million.

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• Topics
• Southeast Asia
• Industrials
• Buyouts
• Technology
• Singapore
• Novo Tellus Capital Partners
• data center
• manufacturing