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Black-owned startup responds on Adapt IT buyback it made at 90% discount

The founder of black-owned startup Uyandiswa Amanda Dambuza says there is nothing untoward in a deal to buy back JSE-listed Adapt IT’s 49% stake in her company at a 90% discount.

“I have also read your article, which somehow seeks to tarnish the reputation of our businesses, that I find unfortunate and completely unfounded,” Dambuza said in an email to Ventureburn today following the publication by the site of an earlier story on the deal.

Read more: Questions raised as Adapt IT sells stake in black startup for ‘90% discount’

She attributed the 90% discount in the buyback deal — which took effect from 1 July — to an “enterprise development contribution”.

Since initially taking a stake in Uyandiswa three years ago, Adapt IT helped build up the black-owned startup (which Dambuza says she started in 2013) to an almost R100-million a year company, with 82 staff.

If one calculates the value of the firm based just on the revenue, the value of the stake Adapt IT held could be close to R50-million. If this is discounted by 90% the true sale amount for the stake might come in at about R5-million.

Uyandiswa founder attributed the 90% discount in the Adapt IT buyback deal to an ‘enterprise development contribution’

However Dambuza said the final amount which her company had agreed to buy out Adapt IT is “much, much lower than this”. She added that Adapt IT is vendor financing 100% of the deal over a five-year term.

“Uyandiswa was a newly formed startup with no carrying value at the start. The contributions of the respective parties was the par value of the shares plus their respective skills and business opportunities. Uyandiswa had a choice of enterprise development partners offering different value propositions and chose Adapt IT on arms’ length terms,” she explained.

As part of the deal concluded with Adapt IT the black-owned startup also acquired the JSE-listed company’s business intelligence resourcing division at an undisclosed price (which includes the 42 staff that were previously employed in the division by the JSE-listed firm).

Explained Dambuza: “This division has particular synergies with the core business of Uyandiswa – a common customer base and consulting business model with economies of scale between them and that is the reason”.

Responding to another question by Ventureburn, she said her company is able to provide project management and business intelligence services to any client and is not locked into any sole supplier deal with Adapt IT.

“Uyandiswa has always served any customer it wishes to and will continue to do so. There is no-lock in, exclusivity or preferential terms for Adapt IT to procure services from Uyandiswa. It is now a fully independent business,” she said.

Featured image: Adapt IT CEO Sbu Shabalala and Uyandiswa founder Amanda Dambuza (Supplied)