Interview: Why Pragma has made a foray into the Netherlands
Adriaan Scheeres wants Pragma to be among the best asset management players globally.
Pragma, one of SA’s leading physical asset management engineering firms, acquired Netherlands-based consultancy, CMS Asset Management. CMS specialises in engineering advisory services related to maintenance and asset management.
Pragma CEO and founder Adriaan Scheeres (pictured) said the acquisition is aligned to the international expansion strategy developed during 2018. He believes that Europe is known for its first-class asset management capabilities, especially in the Netherlands, and we can now offer our expertise in these countries with an expanded network.
M&A Africa spoke to Adriaan about the deal and Pragma’s international expansion.
M&A Africa: Why did you choose the Netherlands as an expansion market?
Adriaan: Before we started with our Europe strategy, we have been doing work in Brazil and Mexico. And we have been successful. We have a franchise in Brazil and Mexico. We found out that we need a good reference from first-world countries to make our practices legit in markets outside of South Africa.
The diversification of our income is important for us. We believe that Europe, specifically the Netherlands, are the leaders in adopting advanced technologies such as automated processes in the asset management industry. We think we can adopt those technologies and apply them in South Africa, Brazil and Mexico. Europe is a leader in advanced technology when it comes to asset management solutions and they tend to do regular maintenance on assets, which is a good thing. And we want to be part of that.
M&Africa: Is diversifying into a Europe a sign that there are few acquisition opportunities in Pragma’s home market?
Adriaan: No. We are growing in SA and there are many opportunities for us to ensure value. There are growing opportunities and maintenance needs in South Africa. There is no need for us to leave South Africa. Over the years we have developed maintenance tools that we believe we can introduce to first-world countries and make sure that our practices are benchmarked with international markets. We still want to strengthen our relations in Brazil, Mexico, and South Africa.
M&A Africa: Do you foresee more acquisitions of standalone companies in offshore markets or getting more clients?
Adriaan: We will look out for further acquisitions. There is no doubt about that. But we want to also expand into other industries such as water reticulation and manufacturing. Those are industries we believe we can find markets. We also want to deploy our software and IT systems to expand in international markets.
M&A Africa: How big do you want Pragma’s income generated from South Africa versus international markets to be?
Adriaan: Currently we generate about 25 percent of our income from international markets. We see that growing in the foreseeable future. Our first benchmark would be to have a 50 percent – 50 percent split between our exposure in South Africa and international markets. We want to grow both markets hard. We are not that well known in international markets, so we want to grow there.
M&A Africa: How will you fund further acquisitions?
Adriaan: When we buy assets in Europe, we will fund the acquisitions with funding from Europe.