DATALEX, the Dublin-based travel communications software company part-owned by financier Mr Dermot Desmond's investment vehicle, is in the final stages of raising private funding of $15 million (€14 million).
It has told The Irish Times it is in advanced discussions with an European and a US venture capital company, and expects to secure funding from each within the next three months.
The additional funding is likely to delay Datalex' plans for a stock market flotation at the end of this year. According to Mr Neil Wilson, Datalex chief executive: "We are perfectly happy with the level of private funds available to us."
The company, which has pursued a strategy of international acquisition over the last year, will receive separate financing of $3.5 million (€3.3 million) from its existing investors in the next two weeks. The shareholding includes a 10 per cent stake held by the Dermot Desmond-owned company, International Investment Underwriters (IIU), 15 per cent held by ICC Venture, and a further 10 per cent stake held by Enterprise Ireland.
The $3.5 million injection will be used to fund three recent acquisitions of US-based airline software product and services companies, while due diligence is under way on a fourth acquisition target. The value of the acquisitions is approaching $10 million and increases Datalex' workforce from 140 to 225, with almost 75 per cent of the workforce now located outside Ireland.
The new round of $15 million venture capital financing will be used for further acquisitions as Datalex seeks to strengthen its position against its chief competitors, Unisys and Equant.
"They have an international size and presence we can only aspire towards at the moment," says Mr Wilson. "Now we want to spend significantly more on our sales and marketing effort in the next six to nine months. The $15 million will sustain our cash requirements and fund another couple of acquisitions."
Datalex is currently changing its business from solely providing communications software products to airline global distribution systems such as SABRE, GALLILEO and SITA to offering complete electronic commerce products and services to all players in the airline industry.
"Unless you have a product you can sell to everyone and their mother, it's hard to be a $100 million business." says Mr Wilson. "We realised we have to move up the value chain through offering services, products and end-to-end solutions to a range of customers." Datalex is currently generating annual sales of between $7 million and $10 million. Two of Datalex's latest acquisitions specialise in consultancy to companies seeking transaction processing facilities and out-sourced software development skills. NICS is an Indiana-based company with offices in London, and International Computer Consulting & Services (ICCS) is a Georgia-based operation.
The current owners of NICS, Mr Frank Nix and Mr Jay Perez, will take up senior roles in the Datalex services and consulting division. Mr Nix will be responsible for the Americas region and Mr Perez will concentrate on the British market.
Datalex has also agreed to acquire Advanced Travel Systems in September. The Florida-based business provides software systems and products for tour operators and wholesalers. Datalex will now incorporate the ATS product within its own Internet Travel Transaction Server, to provide a Web-enabled interface and booking service to the ATS product.
Mr Wilson says the company is in the final stages of negotiation to buy another company, TeamBCA, an Atlanta-based business which specialises in the design, customisation and integration of data and services for the airline and travel industry. The company founder, Mr Tom Cauthern, will join Datalex in a senior role to develop and market the Datalex customer relationship management portfolio.
Datalex's headquarters are in Howth, Co Dublin. It also has offices in Atlanta, Amsterdam and Melbourne.
