17/01/2014 Reitek seeks to clinch Italian acquisition by 2014, CEO says

Proprietary Intelligence

Story M&A planned to increase footprint abroad Forecasts 50%-100% turnover increase within three years Vivocha spinoff to kick off series B round

Reitek, a private Italian customer management software company, aims to acquire an Italian peer with operations in Brazil by the end of 2014, CEO and co-founder Daniele Barki said.

The company plans to expand its product and customer portfolio in Italy and enter Brazil, Argentina, Chile, and Turkey via bolt-on acquisitions of targets generating annual revenues between EUR 2.5m and EUR 5m. Such acquisitions would be paid for with its own resources.

If Reitek were to consider larger acquisitions, it could sell a stake to private equity firms, but such opportunities have not yet arrived, Barki said.

In 2013, Reitek strengthened its balance sheet to grow through organic growth and M&A. It sold a 10% stake to Roberto Pellegrini, former sales and business division manager for Italian mobile operator Tim, and a 35% stake to Costanza Amodeo. Sale values were not disclosed.

Since 2010, turnover hovered around the EUR 10m mark. EBITDA margin is 10%, down from pre-2008 crisis levels of 16%-18%. It has 80 employees, Barki said.

Reitek expects to post revenues of EUR 11m in 2014 excluding potential M&A operations. According to its three-year plan, it forecasts reaching revenues of EUR 15m-EUR 20m, including an acquisition.

Amodeo previously served as marketing manager for Engineering Ingegneria Informatica [ENG.MI] and is the daughter of its co-founder, Rosario Amodeo. Last June, Rosario Amodeo sold a 29.9% stake to One Equity Partners, the merchant banking arm of JPMorgan Chase, for EUR 116.6m. The Amodeo family continues to retain a 2% stake in ENG, according to Mergermarket’s database.

Reitek welcomes proposals from advisers and potential targets, Barki said. The company uses PwC as its accountant. It is looking to widen its cloud services portfolio, which is the company’s main growth driver, already accounting for 40% of its annual revenues.

Vivocha to kick off series B fundraising round

Meanwhile, Vivocha, an Italy-based online customer interactions platform in which Reitek holds a 52% stake, is planning to kick off a series B round

within months, Barki said.

The company expects to raise between EUR 3m and EUR 5m through a minority stake sale. Funding is expected to come from existing and external investors, but a definitive plan has yet to be drawn.

Alongside Reitek, other shareholders include the VC firms Vertis Venture (18%) and Principia II (12%), as well as CEO Gianluca Ferranti (9%) and CTO Federico Pinna (9%). Reitek sold down its 100% ownership of Vivocha in 2012.

Barki said Vivocha was valued at EUR 5m when the company sold a 30% stake to Vertis Venture and Principia II for EUR 1.5m in 2012.

The company has forecast generating between EUR 1.5m and EUR 2m in revenues in 2014, which is expected to increase to EUR 12m through organic growth. Between 1Q and 2Q14, orders from Reitek will account for less than 40% of Vivocha’s turnover.

Vivocha did not use financial advisers for its Series A funding round and it has yet to decide whether to hire one for the next round, Barki said.

The company aims to expand organically in the UK, the US, and France via partnerships modelled after the recent agreement with Germany’s hybris, a vendor of multi-channel communication and commerce software solutions recently acquired by SAP.

Following the integration, Vivocha will create engagement widgets for different visitors, each with a personalised call to action, which enables merchants to decide when and who to engage based on a variety of customer segment rules.

Company overview

Reitek was founded in 1990 as a company with operations in satellite broadcasting technology and Videotel – a videotex online service accessible through telephone lines, similar to France’s Minitel. The company later evolved into a customer engineering software company, Barki said.

Engineering Ingegneria Informatica bought a majority stake in 1992, exiting after a Barki-led management buyout in 2004. Between 2004 and 2008, the company more than doubled its turnover to EUR 8.5m from EUR 4m.

Daniele Barki (56) previously worked at Sixcom, the telematic engineering business of Italy’s Olivetti Group, and Siscat, part of Cds group. After project management experience at Philips Automation, he co-founded Reitek in 1990. He is Reitek’s largest shareholder with a 55% stake.

by Riccardo Ghia in London