NCS makes fourth Aussie acquisition, snaps up Arq Group for $290M

Ng Kuo Pin (NCS) and Tristan Sternson (Arq Group)

Singapore-based NCS has made its fourth acquisition within the space of 15 months in Australia by snapping up Arq Group in a A$290 million deal designed to strengthen digital capabilities and services offerings.

Headquartered in Melbourne -- with offices also in Sydney and Brisbane -- Arq goes to market as a cloud, digital, data and analytics solutions provider and will attempt to provide the Singtel-owned business scale in the local market.

In serving half of the ASX top 20 companies across multiple sectors, key customers include ANZ Bank, AustralianSuper, Domino’s and Qantas, in addition to NAB, The Coffee Club, NSW Rural Fire Services, Queensland Government and Victoria State Government among others.

“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,” said Ng Kuo Pin, CEO of NCS. “Combined with Dialog’s core IT capabilities and extensive reach across eight Australian cities, Arq brings on board the right digital competencies that help create a highly compelling end-to-end digital transformation value proposition.”

From a financial standpoint, Arq’s revenue is projected to reach A$118 million by the end of 2022, representing a year-on-year increase of 38 per cent, while EBITDA is forecast to increase to A$18.4 million. The acquisition price represents an EV/EBITDA multiple of 15.7 times which according to Kuo Pin, “reflects NCS’ confidence” in the prospects of the business and expected synergies ahead.

“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,” he added.

The acquisition of Arq will see a 560-strong team join the NCS business and take combined headcount up to approximately 1900 in Australia following the recent buyouts of Dialog Group, Riley and Eighty20 Solutions.

“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,” added Tristan Sternson, CEO of Arq.

“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.”

NCS has been scaling its presence in Australia since December 2020 via NEXT, the provider’s digital innovation and services arm which supports enterprise-level customers deploying digital transformation projects.

Specific to synergies, Arq currently holds alliances with all major cloud hyperscalers in Australia -- notably Amazon Web Services (AWS), Microsoft and Google Cloud -- and will aim to strengthen NEXT capabilities in digital, cloud, data and platforms to meet “growing digital transformation demand” locally. 

Delivering on such potential will be an Arq team housing 572 technical certifications, 62 design awards and 17 certified partnerships.

“We look forward to welcoming Arq into the NEXT family,” outlined Wynthia Goh, senior partner of NEXT. “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.”