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Brisbane-based workforce management tech company People Infrastructure (ASX: PPE) remains on the expansion path after announcing a $13.5 million acquisition of Halcyon Knights.
The incorporation of the IT recruitment leader, with 55 staff and operations in Melbourne, Sydney, New Zealand and Singapore, is expected to be significantly earnings accretive in FY20 to the tune of $3.9 million in EBITDA.
The deal also involves an earn-out in PPE shares that could reach up to $8.25 million depending on Halycon's ability to meet profit targets over the next three financial years, along with plans to offer perofrmance rights to key employees of the acquired group.
Today's announcement comes within months of People Infrastructure's acquisition of Recon Solutions and Project Partners, founded by Brisbane Young Entrepreneur of the Year 2017 winner Steve Scanlan.
PPE is also chaired by Greencross Vets founding managing director Glen Richards, and its shares have risen 70 per cent in the past year. At the time of writing this morning, shares had risen 4.33 per cent to $2.89.
"The acquisition of Halcyon Knights is highly complementary to our existing Queensland focused information technology recruitment business," says People Infrastructure managing director Declan Sherman.
"Regionally it provides access to the much larger Melbourne and Sydney markets which generate over 85% of Halcyon Knights' revenue. Halcyon Knights also has growing businesses in Singapore and New Zealand.
"Approximately 85% of the revenue generated by the business is from permanent placements and the other 15% of revenue is from IT contracting roles. People Infrastructure is especially attracted to Halcyon Knights' strong leadership team both locally and internationally."
Sherman adds Australia's IT sector continues to grow and will attract a growing share of the workforce market.
"It is one of the three key pillars on which People Infrastructure's success has been built," he says.
The consideration will be funded by a combination of People Infrastructure's existing cash reserves and new debt facilities that have been put in place. People Infrastructure's net debt post acquisition is expected to be approximately $30.5 million.
Lincoln Benbow and Marcus Lynch will join the People Infrastructure executive committee and continue in their current roles as Co-CEOs of Halcyon Knights, while Brent Skinner will continue in his role of national business development manager of the acquired company.
PPE is set to announce its results for FY2019 in late August, and notes the business has traded well throughout the second half of FY2019 with results tracking above levels from the prior half.
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