EOH offloads part of EOH Mthombo to German company

South African technology company EOH is making headlines with its recent decision to sell a 70 per cent stake in its subsidiary EOH Mthombo to German listed company RIB Software SE's subsidiary for a whopping R444 million. In an exclusive interview with CNBC Africa, Megan Pydigadu, the CFO of EOH, shed light on the rationale behind the sale and the implications it holds for the group. The move is part of EOH's larger strategy to streamline its operations, improve its capital structure, and unlock value from non-core assets. The sale of the stake in EOH Mthombo, a subsidiary specializing in estimating and forecasting software and ERP solutions for construction and engineering companies, marks a significant step towards achieving these objectives. By partnering with RIB Software SE, a global player actively seeking acquisitions, EOH aims to leverage its IP businesses on a broader scale and expand its presence in the global market. The transaction, valued at R444 million at an 8 and 1-1-1 times multiple on EBITDA, is a testament to EOH's commitment to strategic growth and financial stability. Megan Pydigadu emphasized the importance of reducing the company's debt burden, with a significant portion of the proceeds earmarked for deleveraging and enhancing the company's capital structure. The remaining funds will be utilized for working capital requirements, ensuring operational efficiency and sustainability. Looking ahead, EOH is on track to offload more assets as part of its ambitious strategy to raise a total of one billion rand. While details of the upcoming deals remain confidential, the company is optimistic about the progress made thus far and aims to conclude additional transactions by the time of its next half-year results. The approach to these divestments will vary based on the nature of the business, with EOH considering total exits or partial solutions depending on the strategic fit. In addition to reshaping its asset portfolio, EOH has been actively working towards cleaning up its balance sheet and addressing past issues. The company's ongoing efforts to streamline operations, rebuild shareholder value, and strengthen relationships with key partners like Microsoft reflect its commitment to sustainable growth and ethical business practices. Despite facing challenges in the current economic climate, EOH remains focused on driving innovation, creating job opportunities, and supporting youth development initiatives to address unemployment and foster economic sustainability. Megan Pydigadu's insights underscore the importance of collaboration between business and government to navigate the complexities of the modern economy. As Africa embarks on the journey of the Fourth Industrial Revolution, companies like EOH are poised to play a pivotal role in driving technological advancement, upskilling the workforce, and contributing to long-term economic progress. By embracing change and investing in sustainable solutions, EOH sets a positive example for the industry and demonstrates its commitment to driving positive change in the technology sector.