DGA debut expected January next year
By Aleksander Nowacki
DGA Doradztwo Gospodarcze consulting firm is planning its initial public offering (IPO) for the end of January next year. The company is planning to raise funds in excess of zł.20 million to spend on organic development of the firm and possibly on acquisitions.
The company has scaled down its ambitious plans to float 35-50 percent of the stock on the Warsaw Stock Exchange (WSE).
"We have not yet had the chance to prove ourselves to investors," says Andrzej Głowacki, DGA consultancy CEO. After meetings with brokerage houses and investors, the company decided that the initial offering should therefore be limited to 20-25 percent of the stock. The funds raised from the IPO would then be spent on development in four separate directions.
The most important factor driving the market for DGA services is currently the in-flow of European Union pre-accession funds. Głowacki cites estimates that in the coming years some E85 million is likely to be available for consulting services, which would represent a major boost for the E235 million-per-year industry. The firm is currently working on EU-funded human resources management projects coordinated by the Polish Agency for Enterprise Development (PARP).
DGA plans to invest in the development of consulting products in such fields as quality management or data and information protection.
"More and more companies need to prove that the data is secure with them, so we think we have a nice growing market right there," Głowacki says. The company has the ISO 17799 certificate in the field of data protection.
The company is also looking to spend heavily on software development, especially working on its three core IT products in e-process, e-quality and e-flow. Głowacki sees the growing convergence of IT and consulting industries as both an opportunity and a threat.
"What gives us the edge over 'the old league' of Polish consulting companies is our focus on providing integrated solutions that incorporate IT elements," he says. "On the other hand, IT integrators are busy developing consulting teams and could potentially bite into our market share." He points out that DGA has so far been able to convince clients that its expertise as a consultancy gives it an advantage over "software engineers who have only recently discovered consulting".
The firm is also looking to extend its branch and partner networks and might seek acquisitions in the near future. Głowacki says that potential acquisition targets have not yet been identified, though they would not include DGA's direct competitors. The firm would opt instead to acquire smaller companies specialized in specific market niches that DGA could then expand into.
The company will also contemplate the purchase of a customer relationship management (CRM) software license, which could then be integrated with the company's current software. These plans are, however, conditional on what level of funds can be raised through the IPO and the possible price of the license.
The firm's clients include large companies, which use its corporate finance services. Głowacki described privatized energy companies the Southern Energy Concern (PKE) and ENEA as "our children". He says, however, that revenue from assisting privatization has recently dried up, as "there is no privatization anymore."
Głowacki says that the firm's client base has recently come to include small- and medium-size enterprises (SMEs) that have been encouraged to use management consulting services by the possibility of reimbursements from the European Union and the requirement to acquire certificates. The EU is one of the most important reasons why the consulting industry, currently accounting for some 0.26 percent of GDP, is likely to grow to resemble more the situation in the EU where the level is close to one percent. DGA seems well poised to benefit from that future increase.
