This month software licensing distributor, Newlease, conducted a reverse takeover of ASX-listed FRR Corporation (ASX:FRR).
The acquisition involved the issue of FRR shares valued at $13.5 million. FRR plans to have a single focus on the IT sector and will divest its remote accommodation interests as a result.
FRR chairman, Mike Hill, said FRR was an investment vehicle that was recapitalised by a number of executives from private equity firm, IronBridge.
"We looked at about 40 companies in the last six months and we met Newlease's Doug Tutus pretty early in that process," Hill said. "We thought it was a great business in a great space and it had a lot of growth opportunity. We thought that was the sort of business that would suit FRR as an investment vehicle to transform it into the Newlease business."
Historically, FRR provides services in refrigeration and air conditioning sectors, as well as permanent and semi-permanent transportable accommodation for the resources and construction industries.
As part of the acquisition, FRR will be renamed as Rhype, which will wholly own Newlease. The Newlease business name will remain.
Newlease CEO, Doug Tutus, said it had ambitions to become a publicly listed company.
"We assessed which is the better way to go either through a new IPO or backdoor listing, and this opportunity with FRR arose," Tutus said. "We were attracted to FRR's team (Mike Everett, Mike Hill, Phil Kapp) and the advisory board. They have a skills set that will assist us with the next level of growth. That's where this opportunity became really attractive for us."
Tutus said it began discussions with FRR about 12 months ago.
"It was chance meeting between myself and Mike Hill, and through the discussions we saw some common ground. They were looking for opportunities within FRR at that time and we were looking at an IPO," he said. "The guys on the FRR board have a very diverse range of experience from brokerages, private equity to business legal assistance. That diversity attracted me to them. Our opportunity with regards to the Cloud is what attracted us to them." Tutus explained renaming the shell company to Rhype Limited would open up further potential acquisition opportunities down the track.
"It's an ever changing world we work in and we don't want to be limited with respect to our brand down the track," Tutus said. "We thought we'd come up with a new brand for any potential acquisitions that are outside what we're centric to, which is the hybrid cloud model."
Next on the agenda, Newlease will focus on areas such as software asset management and building its Asian presence. So far it has offices in Singapore, Thailand and Phillipines, and just recently opened a new office in Kuala Lumpur. Indonesia and Hong Kong are next on the map.
"We'll be looking at cementing our market share in Asia, which is our core focus in the next 18 months," he said.
"We've still got very ambitious targets with respect to our ability to grow not just through netting new products and customers, but actually delivering more value into the existing customer base with the existing product offerings. We're very confident in our growth trajectory and building a solid, steady business as we grow."