iOCO, which is rapidly turning around its financial fortunes, will entertain blockbuster acquisitions of up to R1-billion in value as it pursues a renewed growth agenda after years of being hamstrung by a weak balance sheet and legacy governance problems.
That’s the word from co-CEO Rhys Summerton, who was speaking to TechCentral in an interview following publication of the IT services group’s 2025 financial results on Monday.
Investors should expect iOCO – previously EOH Holdings – to complete four or even six acquisitions in the current financial year, which ends in July 2026, he said. Most of these will be smaller transactions – perhaps in the R50-million to R100-million range – though a much larger deal is also possible.
Summerton, who took the reins at iOCO as co-CEO with Dennis Venter in February, has also said iOCO plans to buy back its own shares, which should help boost its share price, which he described as undervalued.
This marks a significant turnaround for iOCO, which was at risk of hitting the wall a few years ago after it emerged that the business – then EOH – had become ensnared in state capture corruption, including in a dodgy software supply deal involving the department of defence and in a large contract with the City of Johannesburg. Former CEO Stephen van Coller even testified before South Africa’s state capture commission, drawing praise for his candid approach to dealing with corporate corruption.
Summerton said iOCO is in a position to consider acquisitions because the company’s debt concerns have been resolved. “We have about R500-million of bank debt, but we also have R399-million of cash. So, if you look at it on a net debt basis, we’ve kind of solved the [debt problem],” he said.
Acquisitions and share buybacks
It was able to deal with its debt as quickly as it has thanks to a sharp improvement in free cash flow, which Summerton said flows straight down from the Ebitda line in businesses like iOCO have with little need for large capital expenditures.
Ebitda – or earnings per interest, tax, depreciation and amortisation – improved by 68% year on year to R516-million in the year ended 31 July 2025, while interest-bearing liabilities declined to R658.6-million from R951.6-million a year ago. Operating profit jumped by 275% to R421-million.
Impressively, the free cash flow came entirely from the normal course of business, with no proceeds from asset sales during the latest reporting period.
Read: Former Dimension Data boss joins iOCO board
“What people don’t appreciate is that a business like this should really be a very strong cash-flow generator. You have no capex in this business, so your Ebitda – if the business is run well – should translate directly into cash. And that’s what happened,” said Summerton.
And the cash machine should keep pumping, with iOCO expecting at least 60c/share in free cash flow in the 2026 financial year, which will further bolster its balance sheet.
This money will be used to make acquisitions and to buy back iOCO shares while they are “undervalued”. Dividends may follow later, once the share price has rerated, but for now share buybacks seem like a more sensible use of the business’s cash, he said.
But a big portion of the cash will likely be used for acquisitions, with Summerton emphasising that iOCO could soon resemble the EOH of old — before the scandals that plagued it — in that it used to snap up businesses on a regular basis. It was a formula that worked well for former CEO Asher Bohbot, especially when the share price was appreciating rapidly and EOH’s shares were highly prized by founders looking to sell their businesses. For now, though, given the depressed state of iOCO’s share price, it will likely pursue deals with cash.
Read: iOCO is mulling acquisitions as its turnaround bears fruit
“I think this business (iOCO) will become a serial acquirer of tech companies both in South Africa and in the Middle East over time,” Summerton told TechCentral.
He said iOCO is particularly interested in making acquisitions in the cybersecurity space, but there are other, niche companies it’s in talks with about potential deals. – © 2025 NewsCentral Media
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