S&T CIS

History

2022: Closure of representative offices in Russia

As of March 2022, S&T AG's representative offices in Russia are closed.

S&T CIS was a regional association of divisions of the Austrian corporation S&T AG, which included its local offices in Russia, Ukraine, Moldova, Kyrgyzstan, Kazakhstan and the Russian company Amphora Group.

2019: Purchase of 51% of BASS Systems shares in Moldova for 5.74 million euros

The information technology group S&T AG from Austria, one of the largest IT service providers in Central and Eastern Europe, acquired a 51% stake in BASS Systems in Moldova. The deal of 5.739 million euros was announced on August 28, 2019 on the Taiwan Stock Exchange, as part of the operations of industrial computer manufacturer Hua Han, which is part of the giant Foxconn Technology Group. The latter is the majority shareholder of Ennoconn, which owns more than 26% of S&T AG's capital in Austria.

At the same time, it is specified that the Austrian S&T AG bought a stake from a private person, but not from the company. Who is this private person is not indicated. According to some sources who wanted to remain anonymous, in the 2000s, the S&T AG technology group was already trying to penetrate the Moldovan market. Then S&T AG, together with businessman Alexander Kopachinsky, created S&T Mold. The business did not work out, because by that time the oligarch Vlad Plahotniuc had founded Bass Systems. For several years, Plahotniuc and his business partner Onisim Popescu persuaded all government agencies to work exclusively with Bass Systems. A significant part of the projects initiated by the company was never completed. And now the Austrian technology group S&T AG is trying to enter the Moldovan market for the second time.

According to the Openmoney.md portal, since 2013 Bass Systems has won government contracts worth 3.0 billion lei. In particular, the company undertook to support the Asycuda World information system for the Customs Service from 2016 to 2018. The contract value amounted to 52 million lei. In 2016, Bass Systems won a tender for the automation of business processes for the Ministry of the Interior. The value of this contract is 14.3 million lei.

2015

Assets

For 2015, S&T CIS included:

• S&T International
• Amphora Group,
• S&T Ukraine,
• S&T Moldova,
• S&T Kazakhstan
• S&T Kyrgyzstan.

The main S&T customers in the territory countries CIS for 2015 are enterprises,, financial telecommunication fuel and energy industries,, in retail public sectors particular,,,,,,, Bank of Russia Sberbank",,", Unicredit Bank Alfa Bank VTB MICEX",", Beeline"" MTSMegaphone X5 Retail Group Campomos, M.Video",,,,, etc.Aeroflot RAO UES SUEK TNK-BP

The company offers customers monitoring solutions to improve business operational efficiency, cloud computing development for testing complex enterprise IT infrastructures, system integration services, and infrastructure solutions.

Failure in the purchase of Russian companies

According to S&T AG Vice President Alexander Malshakov, who is responsible for the development of the company's business in Eastern Europe and the CIS, initially there were more than 30 companies in the S&T focus area. It came to serious negotiations and preliminary audit with six. Only two companies have fully met all S&T requirements. The Austrians plan to buy 100% of these players, but the transactions have not yet been closed, and their names are not disclosed. In April, a full audit is to be held with the participation of experts from the German division of Ernst & Young.

As can be concluded from Malshakov's words, the results of the work done by S&T at the moment can hardly be called satisfactory.

"You can't even imagine how different the maturity level and mentality of German auditors and investors is compared to the shareholders of our IT companies," Malshakov laments. According to him, most of the people come to negotiations, believing in order of things to clearly or implicitly mislead the "fools-Germans."

So, S&T has repeatedly had to face falsification of business plans for 2015-2016.

"Really, the business is falling apart, and people are doing everything possible to sell their companies based on 2014 indicators - without taking into account crisis factors," says Malshakov.

The scourge of the Russian IT market, he calls the falsification of management reporting. "Almost everyone pays gray salaries and takes profit abroad," he notes. As a result, it is impossible to reliably determine business indicators, and during the audit, shareholders try to underestimate costs, and increase the amount of "profit."

As another example of forgery, Malshakov cites the situation when S&T is offered to buy the so-called "one-client business," and during the audit it turns out that the real management of the client organization is actually carried out by one of the shareholders of the IT company (naturally, this is hiding).

According to Malshakov, there are also adequate shareholders who recognize a serious (1.5 times) drop in their business in 2014, are preparing to sit by another 50% in 2015 and show this openly. But in this regard, they expect a multiplier to EBIT (profit before taxes and interest on borrowed capital) at 10. "That is, their ideas about the price of the business are not based on financial indicators, but on an emotional assessment of their own significance," concludes the top manager.

Such an approach Malshakov tends to consider very indicative for Russia, but he causes sincere bewilderment of European experts. "Poor Germans are tormented in the negotiations, trying to understand why a Russian person sincerely believes that his company costs four annual turns, instead of adequate five EBIT's," he notes.

S&T managed to find domestic companies in Russia, whose owners have been living abroad for many years. In particular, of the two aforementioned structures that came closest to the deal, one belongs to an Israeli citizen, the other to an owner from the United States.

According to Malshakov, these people not only look at things realistically, but also show complete transparency of their intentions.

"When a shareholder tries to tell that he has a very good, completely stable, fast-growing business, which suddenly just bored him, so he wants to completely get rid of him, and urgently to do something (unknown) to others, this cannot but cause suspicion," the top manager explains. And such examples, according to him, are now many. And we are talking about companies with hundreds of employees and tens of millions of dollars in annual turnover. "The audience should always be clear why the person decided to sell his company," says Malshakov.

For example, in one of the companies preparing to buy, the owner recently turned 68 years old. His desire to move away from business is quite natural. And most importantly, he is ready for a flexible sale scheme - in installments for three years, and not immediately, which, by the way, increases the cost of his company, conditionally, from 4 EBIT to 5.5. Such examples in Russia, apparently, are quite rare, because S&T has to adjust its investment plans. "Moving at this pace, we will not be able to make a sufficient number of acquisitions this year for the reasons described above," says Malshakov.

In this regard, the company decided to direct part of the investment budget to the development of its own office in Russia. As the top manager specifies, it is approximately about 10% of earlier allocated funds, but he calls it "very impressive sum". According to Malshakov, the company plans a serious expansion of the commercial directorate.

"We intend to absorb practices and teams, we focus on people who were engaged in sales in European and American companies, mainly Vendore," he says.

As Malshakov explains, now a rather favorable situation has developed for such initiatives in Russia. A number of representative offices of large foreign IT players (he cites Oracle and Dell as examples) have significantly reduced their staff, so there are currently a lot of high-level specialists in the market in search of work.

"However, we also continue to work as part of the initial plan and expect that in the near future we will expand the funnel of potential objects for absorption," Malshakov said. "The focus of our search is still in the field of consulting and service IT companies, in the Big Data and Business Intelligence segment," ^[1] concludes^[1]

S&T allocated tens of millions of euros for the purchase of Russian companies

The Board of Directors of the Austrian IT provider S&T AG approved an investment plan for Russia, for the implementation of which in 2015 a budget of tens of millions of euros was allocated^[2].

The plan involves the purchase of several IT companies in Russia. S&T is aware that the difficult political and economic situation increases the associated risks, but at the same time, the prospects for investment in Russian technologies, innovations and resource centers are optimistic.

Moreover, S&T believes that the return on investments in Russian assets made in 2015-2016 will be maximum (recall that the ruble has fallen 74% against the euro since the beginning of 2014).

For S&T, the priority is the smart data processing area. The investor was interested in players with formed teams offering industrial solutions in the field of "big data" (structures with a turnover of about $5-50 million per year), as well as startups leading developments in the field of "Internet of things."

Comparing the data published by S&T, it was possible to conclude that in 2015 the company was ready to buy about six companies in Russia with a total number of employees in the region of 800-1000 people.

2012

As of April 2012, the owners of S&T CIS were:

• Amphora Group (liquidated in 2014)
• S&T International

2011: Creation of joint venture S&T AG and Amphora Group

On February 7, 2011, it became known that all assets of the Austrian integrator S&T AG in the CIS were transferred to a joint venture (JV) of this company with the Russian Amphora Group. The name of the joint venture was inherited from the Austrians - S&T CIS, Christian Rosner became the chairman of its board of directors, however, according to the chairman of the board of directors of the Amphora Group, Alexander Malshakov, the controlling stake in S&T CIS is now with Russian shareholders. The Austrian side has an option to increase its share, its conditions were not disclosed. Recall that S&T AG absorbed the Russian integrator in November 2010.

Negotiations have been completed with S&T units in Ukraine, Moldova, Kazakhstan and Kyrgyzstan and agreements have been signed on the acquisition of 100% of these companies from the head of S&T AG, says CNews Malshakov. - They employ 160, 50, 20 and 40 people, respectively. The total number of S&T CIS employees reached 600 '. S&T CIS intends to continue to buy local players to enter the markets of Armenia, Uzbekistan and Tajikistan.

The most serious asset acquired this time is the Ukrainian division, which has a set of vendor statuses for the implementation of infrastructure projects. These include APC, Avaya, Cisco, Dell, EMC, HP, IBM, Juniper, etc.

The parties do not name the amounts sent not to buy out regional representative offices from the parent company in Vienna. Amphora only clarified that borrowed funds were raised for this. According to CNews Analytics, in the case of such a transaction, we are talking about more than 15 million euros.

After the creation of the joint venture, development in the market will continue both brands Amphora Group and S&T CIS. 'In the future, we plan to invest in the development of both brands - says CNews marketing director Maria Gorokhova. "But the companies will be clearly positioned - Amphora Group will remain in the Russian market as a provider of service solutions, and S&T CIS will become one of the largest suppliers of infrastructure solutions in the CIS market."

Malshakov calls the main meaning of such an association the provision of the same service to all divisions of the integrator's customers in the CIS. 'Initially, in the transaction between S&T and Amphora, it was not assumed that in the future the assets of the Austrians in the CIS would transfer to the joint venture, "he continues. - We offered such a scheme, but then partners were not ready to go for it, now they decided to rely on local management.

"Part of S&T's restructuring plan is to focus on key markets for us in major business areas," the Austrian integrator explains. - We sold subsidiaries in Ukraine and Moldova to a strategic investor. For a subsidiary in Germany, the closure of which has already been announced, after analyzing all possible options, we decided that its bankruptcy was inevitable. No further asset closures or sales are currently planned. Against this background, S&T CIS intends to continue to buy local players to enter the markets of Armenia, Uzbekistan and Tajikistan.

As of February 2011, the board of directors of S&T CIS included 8 people, mainly Russians, including:

• Andrey Maklakov (responsible for the telecommunications sector),
• Kirill Votyakov (banking sector),
• Nadezhda Boychenko (operational management) - previously held similar positions in S&T International.
• Yuri Lisetsky
• Alexander Kopansky.

They are all minority shareholders of S&T CIS. The strategic management of the new company is carried out from Vienna.

Notes