Historic deal sees BBD, SA’s largest independent custom software developer become 51% black-owned

1 March 2016

Sphere Holdings (Sphere) and BBD are today delighted to announce Sphere’s acquisition of an additional 14.2% of BBD, a 32yr old R500 million a year custom software developer. The cash deal sees Sphere’s ownership stake rise to 49.9% which, together with 1.1% held by Student Sponsorship Programme (SSP), a respected education charity, makes BBD 51% black-owned.

Employing over 550 software developers, BBD is South Africa’s oldest and largest independent custom software development company, servicing the financial services, telecommunications and allied industries, and the public sector. BBD’s founders and management retain 49% ownership and will continue in their current management roles providing continuity of leadership, technical skills, client relationships and strategic execution.

As a world class software development house, and now a majority black-owned company, BBD will have an additional competitive advantage in the South African market.

CEO of Sphere, Itumeleng Kgaboesele said: “We are delighted to increase our holding in BBD to 49.9% to become their largest shareholder. As major investors, and BBD board members since 2007, we know the company well. They have excellent management, a proven business model, loyal clients, and great software, all of which adds up to an outstanding company with excellent growth prospects.”

“As a local and now majority black-owned company, BBD has some formidable new competitive advantages. Over the years I have spoken to their many public and private sector clients who have made clear that they want to do business with high quality, cost effective and fully empowered local service providers.”

BBD’s software, apps, systems and services power SA’s largest most complex public sector organisations including: SARS, National Treasury, the IEC, Home Affairs and the SARB. Private sector clients include Discovery, Momentum, Old Mutual, Liberty, Sanlam, Nedbank, ABSA, Santam, Standard Bank, Vodacom and Acturis one of the UK’s largest Insurance Brokerage Systems.
BBD CEO, Peter Searle said: “Becoming majority black-owned achieves one of BBD’s strategic objectives. This helps companies and state organisations meet their local procurement and transformation targets. And, as a South African company BBD can offer world class services priced in rands – something many multinational competitors cannot match.”

“I think this increases BBD’s commercial competitiveness and in turn allows us to innovate, and attract and retain top programming talent by offering a secure and profitable pipeline of challenging work and the resources to develop staff skills and reward our performers.”

Future plans in a tough economic environment

Sphere and the BBD management team will continue growing the business organically – though it may consider inorganic growth and future commercial partnerships where it makes sense.

Explaining the strategy, Kgaboesele said: “Supporting the critical ICT infrastructure behind many of South Africa’s largest public and private sector companies is an exciting and good business to be in. We will build on our nine year winning formula of working with BBD management to grow the business.”

Kgaboesele said Sphere would continue to leverage its financial expertise, business network, and BBD’s black-owned status to help BBD in three areas:

  • Consolidating and strengthening its position as a market leader in the Banking, Insurance, Public Sector and Telecoms sectors;
  • Growing BBD’s client base in the public, private and SOE sectors; and
  • Expanding BBD into new verticals such as the digital marketing space

Expanding on this strategic intent, Searle added that BBD would build on its strong relationships with its clients, and with its delivery and technology partners. “Despite the economic gloom, we are actually very well placed as a business.  Because BBD’s software infrastructure supports the critical functions of state and private sector, and delivers efficiencies, market demand remains high even through a downturn. So we believe BBD is uniquely placed to service this growing market for custom software solutions.”

“The next phase of BBD’s growth as a black-owned company will be to expand into other international markets while continuing to use local expertise. As for global expansion, our Africa business will remain linked to the needs of current corporates clients on the continent, while we will increase the work we do in the UK and European business.”

“This a significant step forward for the ICT and software development industry in which majority black-ownership remains rare,” concluded Searle.