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Private equity fund takes 20% share in Magix


Magix Integration, a company built on the premise of technology-assisted risk management and integration services, has announced that Conexus Investment Fund has purchased 20% of the company for R11-million. 

The investment will see Conexus becoming an equal partner with the existing Magix shareholders, Chris Hills, Amir Lubashevsky, Tzvi Appel and Hedley Hurwitz.  Conexus founder and manager, Clive Douglas, will also assume the role of non-executive director with a seat on the Magix board of directors.
Unlike traditional private equity deals, the investment is not an indirect take-over where the equity fund slowly bleeds the company dry, but simply an investment in an already profitable, debt free, cash-positive concern, and all the shareholders have equal rights. In addition, the experience and networking abilities of Conexus, and its own investor base, will be a boost to the reach of Magix.
Moreover, the deal is more than an investment into an unlisted company with great potential, but once again brings together one of the original founders of MGX, Chris Hills, and a long time shareholder of MGX, Clive Douglas. Douglas, through managed portfolios, was one of the first institutional shareholders of MGX from the time of its listing in 1995. Due to his personal 20-year relationship with Hills and the Magix management team, as well as the company’s prime market positioning, Douglas is confident of seeing the investment deliver good returns in the medium to long term.
Hills notes that the Conexus investment provides a valuable injection of capital that will allow the company to expand into additional value-adding areas of business and achieve non-organic growth.
“Having bought the company, then called Magic SA, out of MGX for R2 million in 2003, the company has grown from strength to strength. We are in a fortunate position of being profitable and debt free, which will enable us to use this capital to fund our anticipated growth, embark on new projects and strengthen our ability to finance acquisitions.”
As the manager of Conexus, an equity fund, the largest share of which is comprised of his own family’s money, Douglas is tasked with investing in listed and unlisted companies that are unique and have the potential to provide good long-term returns. Douglas notes that this would equate to a growth of at least 30% per annum, a figure he is confident Magix will achieve and exceed.
“Magix is a company in the right place at the right time with a highly motivated management team,” explains Douglas. “The company’s focus on enterprise risk management (ERM) and IT integration has placed it in a prime position to deliver necessary services to South African and African corporations.
“Moreover, Magix is not going into a new field where it has no track record of success. The company has established solid relationships with international suppliers which are able to impart critical intellectual capital they have gained internationally in the ERM and integration space and already has a very impressive, and satisfied, client base.”
“It is interesting that in Cape Town, Magix has partnered with Norman Webster, one of the original founders of Metrofile, and his son Matthew, to form Magix Cape. Conexus has not only invested in a company, but more importantly in the management team.”
Magix is already a trusted partner to most of South Africa’s financial services providers, which have to take additional care in managing and securing their data in the light of new compliance regulations, such as FICA and Basel II. It is also involved in government and quasi-government organisations that have given limited focus to data security and risk management in the past.
These organisations alone offer substantial growth potential to Magix, apart from other industries the company is only starting to deal with. “The breadth of the client base Magix currently addresses bodes well for its future growth and was also a factor in Conexus buying into the company,” adds Douglas.
He does not rule out a listing in the future for Magix, but notes that the investment has been made to achieve a long-term return. Whether this is in the form of a listing or a number of other options remains to be seen. “We’re not here to get in the spotlight, but to do the right things to allow the business to realise its potential.”