Italian IT multinational Almaviva in renewed LatAm push after Brazil deal

Italian IT multinational Almaviva, a firm with deep pockets and an appetite for expansion, is set to ramp up its Latin American operations after acquiring control of Brazilian IT services company Magna Sistemas.

The transaction was closed in April for 340mn reais (US$64.5mn) after negotiations had been underway since at least August 2022. With the deal, Magna Sistemas became Almaviva Solutions. Magna’s former CEO, Adriano Dias, remains at the helm of the rebranded company.

"A very large percentage of their revenue comes from the government sector in Italy. And we're very strong in this segment in Brazil, especially in São Paulo state. In the private sector, they're quite strong in transportation. We, in turn, have a lot of projects in ports, terminals, and so on," Dias told BNamericas, referring to the anticipated synergies.

The Almaviva group sees the transaction as an opportunity to strengthen different segments in Latin America, where it has been mostly known for BPO (Digital Relationship Management, DRM, outsourcing services) and call center operations for large enterprises.

Smart city projects, facilities and real estate management technologies, IoT deployments, control rooms, and transport and defense are some of the areas targeted following the deal. 

The Italian company is also set for “continuous intense M&A activities” focused on enhancing offering and presence in transportation, finance, healthcare and cybersecurity, both in Italy and abroad, it said in a quarterly corporate presentation.

The Magna deal was primarily financed with funds provided by Almaviva and with the contribution of Simest, the Cassa Depositi e Prestiti group company that supports the international expansion of Italian companies.

HANDSHAKE

According to Dias, a first meeting between the parties took place in August 2022, at an event in Italy. 

Magna, which is a longstanding IBM partner and consultancy in Brazil, with more than 20 years of operations, was not considering selling any interest or its control, he said. "We were positioning ourselves in the market more as buyers than sellers.”

Magna had also been growing its Ebitda consistently and showing “solid financial health,” according to the executive. However, the deal seemed an opportunity to boost cash, expand the workforce, and increase cross- and up-selling with Almaviva and diversify the business.

The Brazilian firm is based in São Paulo, with two branches (Rio de Janeiro and Brasília) and more than 1,000 professionals operating nationwide. It ended 2023 with over 500mn reais in revenues and more than 100 active customers.

Under the agreement reached, Almaviva may buy the remaining 49% of Magna in the coming years, depending on market conditions and the general performance of operations, potentially taking the transaction up to 800mn reais.

Almaviva claims to be the third largest Italian group in terms of employees, with 45,000 people in 79 offices in 13 countries. Of the total headcount, 39,000 are outside Italy. It controls around 30 companies, brands or subsidiaries under its global umbrella.

The company ended 2023 with a turnover of 1.18bn euros, up 8.3% year-on-year.

In Q1, the Latin American operations centered around the Almaviva do Brasil subsidiary accounted for 309mn euros in revenues, or 26% of the company’s total for the quarter.