ASG Group to acquire Velrada

Japanese technology giant Nomura Research Institute is expanding its Australian presence, with its local subsidiary ASG Group striking a deal to buy Perth-based IT company Velrada.

Velrada spent much of last year exploring capital-raising options, including an IPO and ASX listing, but has opted instead to accept the ASG offer.

The deal value has not been disclosed, however Business News understands it has been priced at a premium to the $80 million valuation Velrada was targeting in its IPO.

It includes performance-based payments that could lift the total consideraton close to $100 million.

The big winners will be Velrada's founders, Robert Evans and Jennifer Evans, who have a 72 per cent shareholding.

The remaining equity was held by Dominic Nolan and Saul Sabath.

Velrada was established in 2009 and has grown to have 200 staff and annual revenue of $45 million, all without raising external equity.

It will continue operating under its existing management and brand.

ASG Group's Sydney-based chief executive Dean Langenbach described Velrada as a West Australian success story.

“It has leveraged its Microsoft partnership to facilitate the digital transformation of some of Australia’s biggest organisations including Sodexo, Downer, BHP, and Rio Tinto,” he said.

“Velrada’s acquisition allows us to boost our capacity for seamless delivery of Microsoft’s technology, and we are proud to be aligned with a company whose extensive West Australian foothold, and growing global footprint already includes major European customers and the UK Government.”

Mr Evans said he was delighted with the outcome.

“We bootstrapped this company ourselves, and through hard work and innovation, have grown Velrada into one of the most valuable technology companies in Western Australia,” he said.

“With this partnership, Velrada will be well positioned to continue with its rapid expansion in Australia and overseas.

“While Velrada will remain a standalone business, ASG’s investment will accelerate our growth, global scale, and alignment with our key customers.

“Our partnership with ASG will allow us to maintain our close relationship with Microsoft, and provide our valued employees with enhanced global and national career opportunities.”

Nomura signalled last month it was getting ready to expand its Australian operations, when it announced it was raising $200 million of debt capital through an issue of ‘medium term notes’ in the local market.

Nomura said the debt issue was for the purpose of ensuring flexible financing capability and diversifying its funding sources.

The Velrada deal comes five years after Nomura moved into the Australian market through its acquisition of ASG Group, in December 2016.

Nomura expanded its Australian presence last year by acquiring Sydney-based Planit Test Management Solutions.

Separately, ASG Group has completed four acquisitions of its own - SMS Management and Technology in 2017, Brisbane-based 1ICT in 2019, and Canberra-based firms G10 Consulting in 2020 and Pragma Partners in 2021.

Mr Langenbach said ASG has about 2,400 staff, including teams in Manila and India, and was targeting 3,000 by the end of 2023.

This includes pushing further into New Zealand, Canberra and the ACT.

“We’re pretty ambitious,” he said.

Nomura is a multinational technology and consulting firm with annual revenue of US$4.9 billion.