DIALOGUE TO RAISE USD7M AHEAD OF ALTX LISTING

Mergers, Acquisitions and Financial Results

Call-centre specialist Dialogue Holdings aims to raise R51m (USD7 million) in a private placement of 51-million shares ahead of its AltX listing on September 19.

Institutional investors in SA have been courted by the company, and CEO Jason Drew said several were interested in taking a stake. Individuals could also apply, he said, as Dialogue wanted a broad spread of investors to give it liquidity.

The JSE has granted the listing for a maximum of 210-million shares, giving it a market capitalisation of R210m.

However, the remaining shares are held by the directors and the original venture capitalists, who had relinquished only 16-million for the listing.

Dialogue is SA's largest privately owned call-centre operator, with almost 1500 seats at centres in Cape Town, Johannesburg and Durban.

Drew said the offer at R1 a share was good value, and an opportunity to get into a thriving industry that had substantial growth prospects. "If we have one-tenth of the growth that India has seen, it will be a substantial market," he said.

Listing was necessary to boost Dialogue's international credibility and assure clients of its corporate governance credentials, he said. "All our peers around the world are listed, and as we handle more sensitive work for our clients, they want to understand who we are as a business and how we are governed. We also need a good share-option scheme so we can retain and give incentives to our management." The move would also raise enough cash to expand its facilities and employ more staff to handle larger contracts.

"We need more space, more people and more buildings to meet demand from our existing clients and new clients," Drew said. The company may also make some acquisitions to help it offer a wider range of services.

"Three of our large clients have asked for large capacity in other locations, so we are looking at that," he said

Dialogue is forecasting a net profit of R12,2m on a revenue of R114m for the year to December. In the previous financial year, it made a profit of R6,3m on a revenue of R78m. Last year was its first profitable year after it made a loss of R3,6m in 2004, as it set up and expanded its operations, and chased clients for those services. Growth should continue throughout next year, the directors said, when attributable earnings should climb to R19m. Recent client acquisitions include McCarthy Insurance, Media24 and Absa.

Dialogue also won a R106m deal to run MTN's call centre for 18 months, one of the largest outsourcing contracts in SA. A deal has also been won with an unnamed US Fortune 500 financial services company. The contracts will generate about R100m in revenue over the next year, and create 400 jobs.

Business Day