BUDAPEST (Reuters) - Hungarian information technology firm 4iG plans to grow through debt-fueled acquisitions in the central European region, its CEO and largest shareholder Gellert Jaszai told Reuters on Wednesday.
Jaszai took control of 4iG - which provides IT services including hardware and systems management in Hungary - earlier this week by agreeing to buy a 40% stake from Hungarian tycoon Lorinc Meszaros, a childhood friend of premier Viktor Orban.
Orban has used a growing influence in Hungary’s business life to promote a nationalist agenda, labeled by his ruling Fidesz party as the “System of National Cooperation” or NER, which has come to dominate a host of industries.
The state is directly involved in several sectors, including information technology, and the government has said it plans to participate in a 5G network rollout valued at as much as 700 billion forints ($2.4 billion).
Jaszai has a track record of using private and public transactions to build large companies like Opus Global, a holding company owned by Meszaros which has controlled, among others, the media company Mediaworks and tourism company Hunguest.
Jaszai said he had short-term plans to acquire several companies, both to expand and build up a workforce in a tight labor market.
“Both are important if you have regional plans within the next two-three years,” he said.
He said 4iG would even look to acquire larger rivals by issuing debt or taking out loans to finance the deals.
“Investors can get ready, at least on the corporate bond and loan side,” he said. “We will see about equity financing. We will seek out international investors as well once our acquisitions get into the phase where financing is discussed.”
4iG reported 56% growth in revenues in the first quarter, largely thanks to a rapid succession of state contracts secured after Meszaros acquired a stake in June 2018.
Jaszai said he was happy with that growth and saw no problem with the state’s dominant role in the IT market, where about half of the annual 600-700 billion forints in revenues comes from the government sector, a ratio similar to that of other countries.
He said he did not expect a market advantage from 4iG’s ties to Meszaros and, indirectly, to Orban, adding that quality services would get the company more business.
4iG shares have risen fifteen-fold since Meszaros took over at the company last year, outperforming the wider market which was up 17% over the same period. On Wednesday the stock closed 1.6% higher at 1,118 forints ($3.87), while the broader market was flat.
Reporting by Marton Dunai, editing by Deepa Babington