Capital Markets

33-year-old techie eyes NSE listing for Sh100m company

East African Data Handlers founder and chief
East African Data Handlers founder and chief executive George Njoroge. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

Losing data on a major project is a nightmare that has disrupted the plans of many people and even cost some their jobs.

When it happened to George Njoroge, however, it inspired him to set up a business that is now large enough to list on the Nairobi Securities Exchange (NSE).

Njoroge, founder and chief executive of East African Data Handlers, is planning to take his company to the NSE in November. If approved, his forensic services and data recovery firm will be the first technology company to list on the Growth and Enterprise Market Segment (GEMS).

Another IT firm, Empire Microsystems, has also announced its intention to list on the GEMS segment which has less stringent conditions for small-to-medium sized businesses that have high growth potential.
The journey to the bourse for East African Data Handlers began in 2006 when Mr Njoroge lost some valuable data and could not find a local firm to recover it. He saw an opportunity in his misfortune, launching a firm that less than a decade later has grown into a Sh100 million turnover business. 

“It started off as a data recovery business but it has changed into a data solutions company,” says Mr Njoroge, 33, of the company he describes as “very profitable” with an estimated profit margin of 30 per cent.


He says his initial research on data recovery showed him that he was on to a big opportunity.

He was so convinced of the potential that he used his savings and additional borrowings to finance a one-year training course on data recovery in Russia. The Russian connection is apparent in his expatriate staff of 30, who are all from the East European country.

Around 2006, he and a partner, James Kariuki, started the data-handling firm. Mr Kariuki has since left the business but has not severed links and consults for the tech firm from time to time.

Their first client was a manufacturing firm, Karsam Serviettes Company, whose server had crashed. When a Premium Rate Services provider running a World Cup promotion in 2006 suffered a similar fate, it was Mr Njoroge and Mr Kariuki who were called in to recover the data.

The two jobs led to the formal incorporation of East African Data Handlers in 2007. East Africa Data Handlers was initially incubated by AITEC Africa under the mentorship of its founder, Sean Moroney, for one year.

Since then, the company has bagged big contracts for forensic services and data recovery with large firms such as Safaricom, Airtel, Britam, East African Breweries, Kenya Commercial Bank, Nation Media Group and the Standard Group.

The government, especially the Ministry of Interior, has also become a key client outsourcing some forensic functions to the seven-year-old company.

Mr Njoroge says “there is no single commercial bank in Kenya that is not or has not been my client”, adding that the company serves an average of 1,000 corporate and individual customers per month in its Nairobi, Tanzania and Uganda operations, most of whom are repeat clients. 

The company expanded to data recovery for laptops and has now moved to mobile phones, which Mr Njoroge says is a growing market but with a handful providers.

One of the most high-profile forensic investigations that the company has handled involved data retrieval of mobile phone data for the Mercy Keino, the former University of Nairobi student whose death in June 2011 is the subject of an ongoing inquest. “We are among very few companies in Africa that can do this,” said Mr Njoroge.

East African Data Handlers has a 75 terabyte data centre at its Westlands offices in Nairobi, offering storage to SMEs. But it is in computer forensics that the tech firm has carved itself a niche.

Mr Njoroge says that as crime becomes more sophisticated with computers becoming the weapon of choice over the gun, fighting crime also has to adapt to the new trend. He says that there is an increasing trend of theft within banks, corporate espionage and hiding of data and, again, it is in adversity that they have found a business opportunity.

“We realised that this is another area where we can venture,” he said in the interview.

Supermarkets, for example, are using the company to carry out video analysis to identify incidents of pilferage. But it has not been a walk in the park for the Jomo Kenyatta University of Agriculture and Technology (JKUAT) alumnus. The lack of experienced labour in the regional market remains a big challenge for the company.

The company has 15 employees in Kenya and another 15 in Tanzania, which he says are all from Russia because it is the “global leader” in data recovery. The firm expects that as more resources become available it will be able to develop talent that it needs locally.

Listing on the NSE, he says, is meant to give it a profile and access to the capital it needs to expand to the rest of the continent. “We want to replicate the business in 40 African countries,” said Mr Njoroge.

The first entry points will be Lagos, Cairo and Johannesburg which will then act as bases for further regional expansion. Mr Njoroge said the finer details of the listing, including the shareholding structure and board membership, will be announced later under advisory from the transaction consulting team.

The company has appointed Equity Investment Bank as the lead transaction adviser for the listing.
Johnson Nderi, corporate advisory and finance manager at ABC Capital, said that for investors, IT firms are proving popular due to their business model that is not capital-intensive and allows products to be rolled out easily. “They have high margins and the ability to have their business scaled up,” said Mr Nderi.

Empire Microsystems, a tech firm that offers telecommunication outsourcing, financial management software and related solutions to private and public sector firms, is also planning to list on the GEMS but at a later date.

The announcements by the two tech firms mean that investors will have a chance to buy into at least four companies by the end of the year should nominated advisers and the issuers stay on course.
Mayfox Mining and Flame Tree Group have both announced that they are planning to list on the GEMS by end of the year.

Mayfox, which is prospecting for gold in Turkana, has appointed Kestrel Capital as its adviser while Burbidge Capital is handling consumer goods and tank manufacturer Flame Tree Group’s listing.
Real estate firm Home Afrika is currently the only firm listed on the GEMS.