Mergers, Acquisitions and Financial Results

Call-centre specialist the Dialogue Group has sold 7% of its shares to black-owned media and communications group MSG Afrika Investment Holdings for R24m. This is the AltX-listed company's first step towards a goal of becoming 26% black owned.

MSG Afrika bought 15-million shares previously held by existing shareholders so no fresh shares were issued that would dilute the stakes of other investors, said Dialogue CEO Jason Drew.

Most of the shares were owned by a private venture capital firm that helped Dialogue with start-up cash years ago. The venture capitalists made a nice return on their investment, Drew said.

Another 2-million shares were sold by Dialogue's strategy director Duncan Miller. They were sold at 160c each, based on a 60-day average trading price. Its share price rose to 198c recently, but traded 1,5% down at 195c after yesterday's announcement.

Drew said Dialogue was in no hurry to reach the black ownership target of 25%, and would wait for deals with black investors who could add value and help to grow the business.

Dialogue already had a BBB EmpowerDex rating based on its staff profile, its investment in training and the promotion of previously disadvantaged individuals. More than 90% of its managers and 93% of the workforce were from previously disadvantaged backgrounds. Drew said the new equity deal could pump that up to a grade A rating.

MSG Afrika is majority owner of the Jupiter Drawing Room advertising agency and of Curious Pictures, a television production group. It owns the Communications Firm and has shares in Telkom Media and Quarto Press. Those groups hold contracts with several blue-chip companies including Absa, Edcon and MTN, which also use Dialogue's call-centre services.

"This was an opportunity to get a shareholding by a group with which we have synergies," Drew said. "We think the relationship will be particularly successful because we overlap so heavily in our client base, and that gives us new ways to work with our customers. There is a great opportunity to talk about how we deliver their brands through our call centres."

MSG Afrika was co-founded by CEO Given Mkhari, who holds 37,5% of its shares. He became a Dialogue nonexecutive director last year. The investment was its first outside media and communications and would diversify its investment portfolio, he said.

"We believe the South African call centre industry ... has buoyant growth prospects, with call-centre outsourcing in SA and offshoring rapidly gaining popularity," Mkhari said. "We believe SA is a destination of choice for call centre outsourcing, and are proud to be investing in the leader in this field."

Dialogue's maiden results for the year to December showed revenue up 55% to R121m and headline earnings a share of 7,6c, up from 3,6c.

Business Day