- IT firm postpones IPO, initially set for 2013, to 2017
- Firm seeks to diversify into financial services, government automation
- CEO warns that corruption could hinder African boom
IT firm Seven Seas Technologies has pushed back its initial public offering until 2017 to allow it time to tap new countries in Africa and reduce its reliance on its home market.
CEO Mike Macharia, who founded the company 14 years ago, said Seven Seas aims to generate 50 per cent of annual revenue from Kenya by the time it goes public, compared to 80 per cent at present, and the rest from other African markets.
To achieve that, it plans to diversify beyond offering information technology hardware, software and consulting services to telecom operators to serve banks, insurance firms and government as well, Mr Macharia told the Reuters Africa Summit.
"We thought the best time to list our business is when we have a big grip on government and financial services businesses," he said, as bigger revenues and profit should justify a higher share value.
The company also plans to start operations in Angola and Mozambique within the next year, extending existing operations in Kenya, Zimbabwe, Zambia, Ethiopia and Nigeria.
The initial target date for an IPO in 2013 was also affected by an uncertain investment climate due to Kenya's presidential election last March, which in the event passed smoothly.
Mr Macharia, 39, who is the majority shareholder, declined to comment on the company's financial performance, saying it is a private company, but Forbes magazine estimated Seven Seas' annual sales at $50 million in 2012. The company has 130 employees.
Mr Macharia said there was massive opportunity for information technology firms in sub-Saharan Africa as governments race to automate services in areas like healthcare and security.
Kenya's government plans to spend $1.5 billion in its 2014/15 financial year on information technology initiatives while the Nigerian government will spend $20 billion, he said.
Widespread graft in Kenya and the rest of the continent, however, posed a serious risk to investors that could also threaten the much heralded boom in African economies, Mr Macharia warned.
"Corruption is one of the biggest hurdles for us ... it is such a big cancer."
The problem was particularly bad in the information communication technology sector which is not very well understood in Africa, he said.
"We need to have stiffer penalties for corruption. We just have to take it seriously and stamp it out with the right force that is required," he said.
Seven Seas, which is 80 per cent owned by local Kenyan investors with the rest of the shares in the hands of a global private equity firm, which Mr Macharia declined to name, is in talks about three potential new joint ventures in Africa which it hopes to conclude in the next year, but gave no details.