ASX-listed Quantify Technology has entered into an equity partnership arrangement with 100 year old unlisted Gerard Private Holdings, owner of GSM Innovations, or “GSM-I” which produces a range of internet connected household technology as Quantify seeks to shore up a dominant position in the smart home technology sector. Under the terms of the deal Quantify will issue Gerard Private Holdings, 240 million fully paid shares in the company and a further 110 million performance rights, valuing the deal at approximately $4.8m.
GSM-I’s product line covers a range of smart home devices including lights, switches, garage door units, and appliances that can be installed by any qualified electrician and will allow the end-user to configure these devices to suit their varying requirements. The GSM-I products can also be scaled to accommodate a variety of domestic and industrial applications suitable for both new and existing premises. The domestic market for smart home devices is expected to scale above $2 billion in 2021.
GSM-I trades under the name of Zimi-Powermesh and was formed 3-years ago by Gerard Private Holdings, the privately-owned parent company of electrical wholesale supplier, GSM Electrical to develop its range of automated home devices.
The Gerard family boasts a 100-year history in the supply of electrical products, probably best known for the development of the Clipsal C-Bus product range, - a home automation brand which was sold to French-owned Schneider Electric in 2003.
Gerard Private also supplies electrical products to the domestic retail market via another wholly-owned subsidiary, GSM Retail.
The GSM-I product range complements Quantify’s qDevices product range which includes the qDimmer, qPower and qBridge devices. When combined, the Quantify and GSM-I product ranges will deliver a commanding position in Australia’s home automation market.
The deal will also result in key members of GSM joining Quantify, with Gerard Private’s chief executive officer, Simon Gerard, joining Quantify’s board of directors, and Jordan Tentori to be appointed Quantify’s Chief Technology Officer.
Quantify Technology’s Chief Executive Officer, Brett Savill said:
“We have been looking for the right partner for some time and could not be more delighted to be working with Simon, Jordan and Gerard Private. Home automation is rapidly maturing meaning it is important to have multiple channels and a broad range of products. Quantify Technology’s acquisition of GSM-I is a real case of one plus one making three.”
As a part of the GSM-I purchase, Quantify is also planning to raise an additional $4 million via a placement to professional and sophisticated investors that will be used to help fund the acquisition costs and provide working capital for the ongoing development and management of the larger combined entity.
Upon the completion of the GSM-I acquisition and capital raising it is expected that Gerard Private will own around 40 per cent of the issued capital in Quantify.
The transaction will come with a swag of benefits for the combined Quantify group that includes the ability to ‘cross-sell’ a more complete product range, a single platform for all connected products, better access to the electrical wholesale market through GSM-I’s well-developed network and reduced costs through the integration of the two groups.
The tie-up will also provide Quantify with an exclusive 3-year distribution contract with the Gerard-owned GSM Electrical group which will distribute, promote and sell the company’s product range to more than 900 electrical wholesalers across Australia. Notably, the contract can be extended at the end of its term, on a rolling year by year basis.
The smart home market in Australia, estimate to grow above $2 billion next year has been expanding at around 16 per cent per annum. At present around 25 per cent of the 10 million homes in Australia have some level of automation. This figure is estimated to rise to more than 49 per cent by 2025, delivering Quantify a burgeoning market for its developing product range.
With the purchase of GSM-I, Quantify is now well placed to take a commanding position in the developing, near multi-billion-dollar domestic home automation market. The company expects synergies between the two groups will facilitate the expansion of Quantify-GSM technologies into the broader global market and deliver ongoing innovation of the company’s product range in the coming years.
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By Matt Birney
