JSE-listed technology group iOCO has set its sights on becoming a “serial acquirer”, with CEO Rhys Summerton telling investors on Wednesday that the company had evaluated more than 10 acquisition targets — ranging from R50-million to R700-million in equity value — and has a pipeline of further deals to pursue.
Speaking on an investor call following the release of iOCO’s interim results for the six months ended 31 January 2026, Summerton said the acquisition of the MySky Group of Companies — the first deal the former EOH has executed in eight years — was a signal of intent rather than an isolated transaction.
“We kind of want to see iOCO get to this serial acquirer position again. And if you can really pull that strategy off, that’s when you get a real re-rating in the value of the business,” Summerton said.
The ambition carries historical resonance. EOH, as iOCO was previously known, built itself into one of South Africa’s largest tech groups through an aggressive acquisition strategy, completing dozens of deals over more than a decade under former CEO Asher Bohbot.
At its peak, the group had a market capitalisation of more than R20-billion. But a corruption scandal that emerged in 2018 — involving irregularities in public sector contracts, particularly with the department of defence and the City of Johannesburg — triggered a collapse in the share price, a massive write-down of goodwill, and a protracted period of asset disposals and debt restructuring. The company rebranded as iOCO in 2022 as part of its efforts to distance itself from the EOH legacy.
Disciplined
He added that iOCO would maintain a disciplined approach to dealmaking but could move quickly when opportunities arose. “We’re not making huge bets at this point. They’re smaller bets, and they’re based on an element of cash, an element of shares that are issued, and profit warranties or profit earn-outs.”
The MySky acquisition, announced alongside the interim results on Wednesday, carries a total purchase price of R52-million, comprising cash and an equity component, with an additional profit earn-out based on future performance.
Summerton described MySky as a founder-led business with strong technical leadership, noting that it is one of only two HPE Aruba networking platinum partners in South Africa.
Read: iOCO shifts to offence with first acquisition since turnaround
Critically, he said there was very little overlap between the two companies’ client bases, creating significant cross-selling opportunities. MySky will be run along iOCO’s “radical autonomy” model, with its founders retaining operational control.
“We want these founders of the business to continue to deliver as they have in the past, and we have very high hopes that they will continue to deliver into the future,” Summerton said.
Summerton said the broader market was ripe for consolidation and that iOCO was well positioned to lead it, citing the group’s strong balance sheet and potential tax benefits that would accrue from any consolidation activity.
“There are not many players that are as well positioned to consolidate the market as iOCO is,” he said.
He outlined a capital allocation framework in which the group’s growing free cash flow — targeted at more than R400-million/year — would be split between share buybacks and acquisitions. If half were deployed on acquisitions at 4-5x earnings, he said, that alone could add close to R50-million in Ebitda annually at group level.
iOCO has not raised any debt to fund acquisitions and Summerton said the company was comfortable operating with up to 1x net debt to Ebitda, though it would only take on additional borrowings for a compelling deal or to reduce the share count.
The group has now repurchased 9.3 million shares — approximately 1.5% of its issued capital — at an average price of R4.14/share, reducing shares in issue to roughly 620.9 million. Summerton said iOCO was the only technology services company on the JSE currently buying back its shares.
Asked when the company would resume paying dividends, Summerton was blunt: “Hopefully never. We return capital through share buybacks.”
Guidance revised
He also revised iOCO’s full-year Ebitda guidance upward. The group had previously guided for R580-million to R600-million in earnings before interest, tax, depreciation and amortisation; having already generated R305-million in the first half, Summerton said the company now expected Ebitda to exceed R610-million for the full year ending 31 July 2026.
The group is targeting free cash flow per share of 60c and long-term double-digit growth in that metric. Summerton outlined a medium-term aspiration he described as “500 divided by 500” — R500-million in free cash flow divided by 500 million shares in issue, yielding R1/share in free cash flow.
Read: Dennis Venter resigns as iOCO co-CEO
“You can choose the multiple you want to pay for that. Maybe that multiple is 8x, 10x, 12x … but I think the number would be a lot higher than 4x, which is where we are at the moment,” he said. — (c) 2026 NewsCentral Media
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