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NCS acquires ARQ Group to continue Australian expansion

By Catherine Knowles
Fri 1 Apr 2022

NCS has acquired the digital services firm ARQ Group in Australia for A$290 million. The move brings to scale NCS NEXT in Australia, which now offers end-to-end digital transformation solutions for clients.

Headquartered in Melbourne, with offices in Sydney and Brisbane, ARQ has expertise in cloud, digital, data and analytics solutions, and is a fast growing digital services company in the country.

ARQ's revenue is projected to reach A$118 million by end 2022 representing a year-on-year increase of 38%, while EBITDA is projected to increase to A$18.4 million. The acquisition price represents an EV/EBITDA multiple of 15.7 times.

This investment is NCS's fourth in Australia in the past 15 months as it expands its footprint in the Australian market. NCS recently acquired Australia's largest privately-owned IT services company, The Dialog Group (Dialog) following two previous investments: cloud consultancy Riley that specialises in Google cloud applications and a majority investment in cloud transformation specialist Eighty20 Solutions that has capabilities across Microsoft platforms.

NCS CEO Ng Kuo Pin says, “This latest acquisition completes a jigsaw of strategic investments in Australia, ramping up our presence in a market that is critical to our regional expansion.

"Combined with Dialog's core IT capabilities and extensive reach across 8 Australian cities, ARQ brings on board the right digital competencies that help create a highly compelling end-to-end digital transformation value proposition.

"Taken together, our four investments to date have given us the necessary scale, capabilities and credibility to compete as a regional digital powerhouse as we help governments and enterprises in Singapore and Australia achieve their digital transformation goals.”

According to the company, ARQ has client coverage and serves half of ASX's top 20 companies across sectors including financial services, utilities, retail, healthcare, travel and government.

This includes ANZ bank, AustralianSuper, Dominos, Qantas, Transurban, nib, NAB, The Coffee Club, NSW Rural Fire Services, Queensland Government Department of Education, Victoria State Government Department of Transport, and more.

ARQ also has a partnership ecosystem across major cloud hyperscalers in Australia and a 560-strong team. According to NCS NEXT, the acquisition will bolster the company's capabilities in digital, cloud, data and platforms to fulfil growing digital transformation demand in Australia's large addressable market.

ARQ CEO Tristan Sternson says, “Joining the NCS family is a tremendous opportunity to continue growing the business as it now allows us to go international and serve regional clients besides capturing more domestic market share by leveraging synergies within NCS.

"We are well primed for expansion, having grown our government footprint to over a third of our business, acquired many new customers and hired 300 new talents on board. We intend to keep optimising NCS world-class IT and digital capabilities to keep building innovative solutions for our clients.”

As part of its transformational growth plan, NCS has been scaling its presence in Australia since December 2020 to serve Australian clients through NCS NEXT, its digital innovation and services arm.

NCS NEXT senior partners Wynthia Goh says, “We look forward to welcoming ARQ into the NCS NEXT family. ARQ's highly experienced and scalable agile teams will become part of NEXT as one regional digital team to serve clients across the region in the post-pandemic era. Together, we will unlock more synergies between Australia and Singapore and enable cross-pollination of tech innovation.”

The acquisition is subject to the receipt of the relevant regulatory approvals and is expected to complete by May 2022.

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