AUCloud to invest $30m in acquisitions for expansion

AUCloud, the award-winning provider of cyber security and cloud services, has announced it will be making $30m worth of strategic acquisitions to expand its business and product portfolio, increase revenue, and extend its geographic reach. This critical development underlines AUCloud's ambition to achieve profitability in the financial year 2025.

The company will acquire PCG Cyber, Venn IT and Arado. PCG Cyber is a cybersecurity consultancy firm with specialisation in Australian government security advice and operations. Venn IT offers data resilience, backup protection and other professional consulting services. It services key sectors such as mining, financial services, education and distribution. Arado, with a significant market presence in Queensland, offers a suite of cloud and managed services. It has a diverse customer base including state and local government and enterprises across sectors such as agriculture, industrial, health and resources.

CEO of AUCloud, Peter Maloney said, "The announcement of the acquisitions marked a significant step in our commitment to enhancing our comprehensive suite of cyber security and secure cloud solutions for our customers and positioned the company on a transformational growth trajectory." He further added that this expansion would not only broaden AUCloud's product, revenue and geographic spread but also integrate the unique technologies, skills and expertise of highly skilled providers into the company's operations.

Mr. Maloney pointed out that the acquisitions form part of an expansion strategy outlined in 2023 to build, partner and acquire new capabilities in cyber security and cloud markets. This endeavours to leverage the capital invested in its existing four sovereign cloud platforms. His vision is for a capital-light, diversified cyber security and cloud solution offering with a strong national footprint.

AUCloud is expected to achieve an Underlying EBITDA of approximately $4.7m on revenue of $36.6m in FY25. The company intends to make a transition to a positive monthly operating cash flow in the first half of the FY25. These acquisitions place AUCloud in a strong position in the fragmented cloud and cyber security sector. It enables the creation of a scalable enterprise and further aids the company's goal to merge and acquire high-quality cyber businesses rapidly.

The company is currently undertaking an accelerated renounceable entitlement offer of up to $30m, underwritten to $25m, to fund the new acquisitions while also covering transaction costs. The balance will be used to fund working capital requirements. AUCloud has sought the advisory services of Maddocks, Nexia Australia, and Ord Minnett for these transactions.