By David Ingham
Digital Technology Company and BV Group buy equity in e-solutions company, Newtek; flotation targeted for 2004.
Digital Technology Company (Digitel), a KSA-based fund focused on technology and IT startups, has completed one of its first investments in a regional company.
The company chosen is Newtek, a year old systems integrator and solutions company that is particularly focused on financial services. Digitel is investing an undisclosed sum, along with US-based BV Group, which is represented locally by SARA Telecom.
The injection of cash will help Newtek in its stated goal of going public within five years. “Since we started in 1999, Newtek’s business plan has been driving it towards IPO in 2004,” says Youssef Ward, president and CEO of Newtek. “We had planned to be taking venture towards the end of this year — so we’re actually running a few months ahead of schedule.”
Newtek’s focus on e-business was one of the major attractions for Digitel, a fund that aims to invest $100 million in pre-IPO companies over the next five years. Newtek’s capabilities have been showcased by a project with Riyadh Bank to transform the bank’s operations and move it towards an electronic service footing.
“We were attracted to Newtek for its vision, its active pursuit of business opportunities, together with favourable market conditions in the Middle East,” said Ahmed Al-Sari, Digitel board member. “There is now real potential for significant value appreciation.”
Executives did not specify how much of Newtek’s equity the venture capitalists have acquired, nor whether the eventual flotation would be local or international.