Listed on the London Stock Exchange and included in the FTSE 250, Incepta is a global marketing and communications group with a market capitalisation of circa £300-million.
The transaction is the product of a four-year relationship between Kagiso and Citigate SA, during which time the latter undertook numerous projects for KTI, its subsidiaries and its major shareholder, the Kagiso Trust.
"Given the increasingly important role of corporate and financial communications in a business environment dominated by governance issues, we searched for a strategic investment in the sector," says Eric Molobi, the Executive Chairman of KTI and a non-executive director of Kagiso Enterprises.
"We have always been impressed with the quality of Citigate's work and the company's commitment to understanding Kagiso's specific needs. Therefore, it made sense to enter into discussions with a communications company with which we already had an excellent relationship. By partnering with a multinational group, we are acting on our conviction that the Kagiso Group's services and expertise are globally-exportable," Molobi notes.
David Wright, Executive Chairman of Incepta, says the group's decision to ratify the Kagiso-Citigate SA deal was based on the fact that it involves much more than an equity exchange: "As a multinational organisation, Incepta is keenly aware of the need to accommodate local imperatives and market requirements. From our perspective, the participation of a company such as Kagiso, with its outstanding empowerment credentials and its position as an influential media player in South Africa, is a huge value-add."
Citigate, which reversed into Incepta in 1997, entered the South African market in 1995 and has continued to invest in the country, acquiring several new businesses and expanding its offering to mirror the integrated communications model used across Incepta's subsidiaries operating out of 69 offices across the world.
Consummation of the transaction required special approval from Incepta's main board, as the Group's policy is to own all its international subsidiaries outright.
Haroon Lachporia, the MD of Kagiso Enterprises, and Roger Jardine, the CEO of Kagiso Media and a director of several subsidiaries within the Kagiso Group, have been appointed to the board of Citigate SA as non-executive directors.
Lachporia says his company's role will be to act as strategic equity partner to Citigate SA, assisting with marketing the business and its products, and with the implementation of, skills transfer and employment equity programmes.
Kagiso Enterprises' portfolio already contains stakes in the education, IT and tourism sectors. Although the investment in a marketing communications agency such as Citigate SA is a first for Kagiso Enterprises, it represents the continuation of a trend towards investing in specialised services businesses.
Citigate SA and some of the companies in the Kagiso Group have already done several joint pitches. There is a good fit between Citigate SA's capabilities and that of Kagiso's educational television, video, Internet and broadcasting operations and we will be looking at making the most of these synergies now that the link-up has been formalised.
Managing Director of Citigate SA, Adrian Horner, believes that the transaction represents the first phase of the company's empowerment initiative, laying the foundation for the achievement of further BEE objectives, including those related to social responsibility; affirmative procurement and skills development of appropriately-qualified previously disadvantaged individuals to achieve the company's goal of employment equity.
"Naturally, for a business transaction such as this to succeed, there must be mutual advantages. I believe the most important of these is the fact that Citigate will help Kagiso to strengthen its global perspective, while Kagiso will help Citigate to sharpen its local focus," Horner concludes.
