DCC sells Infotech arm to Aurelius in mid-market buyout
So, in the end, it took eight months for DCC to bring down the curtain on 37 years in the IT business in Ireland with an agreement to sell DCC Technology’s infotech distribution business (mainly Exertis) to Aurelius Private Equity Mid-Market Buyout, in a deal worth £100 million (€115 million).
On the one hand, the disposal shouldn’t come as too much of a surprise when, in the IT sphere, a span of 37 years seems like aeons. But it’s also worth bearing in mind that there are times when even eight months can seem like an age in this industry.
It all began in 1988 when DCC invested in Sharptext, which grew to become Ireland’s largest IT distributor, and Micro-P in the UK, two companies which formed the backbone of Exertis. The Irish operation eventually grew to include Sharptext, Arc Telecom, MSE and SerCom Solutions. They were all brought under the Exertis brand 11 years ago in November 2013.
At its peak, the DCC Technology operation expanded to 21 countries, located across Europe, North America, Asia-Pacific and the Middle East.
The businesses being sold, which do not include the Pro Tech business (principally based in North America), contributed around £2bn in combined revenues to DCC plc in the year ending March 31, 2025 (out of a total of £4.645bn from the entire DCC Technology operation).
The tight margins in that area of the business are reflected in the fact that Exertis contributed around 1% of the group’s total operating profit of £617.5 million (so that’s about £6 million or so), compared to 12% (£82 million) from the entire DCC Technology operation.
Although, in DCC’s words, the transaction values the business sold at a total enterprise value of around £100 million “on a cash-free, debt-free and normalised working capital basis”, the net cash proceeds to the company “are not material, reflecting the working capital seasonality, and the supply chain financing (£156 million at 31 March 2025)”.
In a statement, DCC chief executive Donal Murphy, said the sale would enable the company to focus on “our high growth, high return, energy business”, adding the company was “confident that Aurelius will be a strong partner for our UK and Ireland Info Tech business, driving further operational and financial improvement”.
The transaction is expected to be concluded by the fourth quarter of this year. According to Aurelius there is “significant earnings growth potential for the business, with infrastructure and processes already in place to deliver it”. It believes growth and profitability improvements will be “enhanced by a recovery in market demand, which is forecast based on a shifting technology ecosystem that drives positive longer-term tailwinds”.
Given DCC’s very clear, very public intent to focus on its energy business, the purchase of Exertis by Aurelius seems to be a very welcome and timely development for the UK and Ireland operations. Unlike DCC, Aurelius sees significant value in owning Exertis. Andrzej Cebrat, managing director Aurelius IV and V, argues that “Exertis in the UK and Ireland ticks all of Aurelius’ boxes: with £2 billion in annual revenues, it is an attractive size, and it offers significant operational improvement potential.”
The investment group is expected to deploy its WaterRise team of specialists “to support a return to operational excellence and growth”. Aurelius boasts that a huge advantage and differentiator is the ability to draw on “hundreds of years of collective professional experience with over 100 Operational Playbooks to draw on”, so it doesn’t have to “reinvent the wheel each time we work with a portfolio company, but rather bring this highly valuable experience to bear”.
Back in November last year, DCC said it would review its strategic options for the technology business, “following completion of its value enhancing operational improvement programme, within the next 24 months”. In that context, selling the distribution business eight months later seems a fairly rapid conclusion. Even for this industry.
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