Computacenter duo clean up again

Dealogic float raises fortune

Channel Roundup Computacenter's super-rich founders Philip Hulme and Peter Ogden are to make a second fortune this week, through the flotation on AIM of their investment banking software business Dealogic. The IPO could see the pair net up to £45m each - on paper for now, as they have no intention of selling stock just yet.

Hulme and Ogden set up Dealogic in 1983 with co-founder Simon Hessel. He wants to cash at least half of his shares, which would be worth £22.5m at the top end of valuations. The fourth major shareholder, CEO Tom Fleming, is not selling shares either. The firm says the IPO will also give it currency for acquisitions and a mechanism for staff retention.

Hulme and Ogden are long-time members of the Sunday Times list of the UK's richest 500 people. They retain big shareholdings in Computacenter, Europe's biggest IT products reseller, which floated in 1998.

ECE buys Stream

Stream International, the much-sold outsource tech support firm, has a new owner. US rival ECE Holdings is buying the business from Solectron for an undisclosed sum. The combined group will have 10,000 employees in 19 call centres in the US, Canada, Europe and Asia. ECE is much the smaller of the two, but it has a rich parent - private equity firm HIG Capital.

Solectron bought Stream in 2001 from private investors, who bought the company from RR Donnelly, the US printing services giant. RR Donnelly had bought Corporate Software, once a very big US-Anglo reseller, to form the basis of a tech support outsource service for the computer industry. Corporate Software, the reseller rump - actually a very big $1bn revenues rump - was sold to Level 3 in 2002 for $89m and $50m assumed debt.

The acquisition appeared eccentric, except for the fact that it bulked up Level 3 - an IP backbone provider, remember - revenues sufficiently for it to avoid breaching banking covenants. And as if that wasn't enough, Level 3 then went out and bought another big software reseller, Software Spectrum, the same year. How is this reseller business doing?

Elcom debuts on AIM

Remember Elcom, another venerable IT reseller which changed its spots? The US-owned firm is a NASDAQ over the counter stock but it has come to the UK to gain a secondary listing on AIM this week, to gain £1.7m net of expenses through a share placing.

Robert Crowell, CEO, told the FT that the company had been unable to raise funds in the US, following the September 2001 attacks. This strikes us as an implausible reason for the failure. Elcom was once a very big firm indeed, with a large US-UK reseller business and an electronic procurement software arm.

Trouble was, it wasn't quite big enough to keep up with the vicious consolidation rounds within the corporate reseller business in the late 90s. And trouble was, its promising procurement software stayed promising for an awfully long time. Last year it made an operating loss of $5.7m on sales of $3m. But it has real customers, which include the Scottish Executive. According to the FT, Elcom expects to win "a significant share" of public sector procurement software sales in England in coming years.

The company divested its reseller business to concentrate on the ecommerce side. It had come to the UK through the acquisition of a big corporate reseller called Lantec, a privately-held firm which had formerly been owned by JWP and Businessland. Elcom sold off most of its UK business, the corporate reselling arm and the distribution subsidiary, to SCC in 1999 for £28m. The following year it sold the rest of the reseller business to an MBO team. ®

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