Sirma Group Holding aims at global company with EUR 100 mln. revenue in 2020

Sirma Group Management. Source: Capital

Sirma Group Holding management team

On 16th September 2015 started the IPO of Sirma Group Holding, which was launched with a presentation for institutional investors and media.  Order for subscription of new shares are accepted by all brokers till 15th October. ELANA Trading as the IPO manager accepts orders and will collect all from the brokers to make the allocation withe the company. IPO details

The Road to Global

Sirma Group Holding was started in 1992 by five students who were friends and decided at a party to found a software company. Business started simultaneously in Bulgaria and Canada where one of the students resided. Now, 23 years later, this is a group of leading IT companies with sales in more than 50 countries around the globe. The group comprises 11 subsidiaries, 3 associated companies and 4 consortia. It employs about 340 people. So far, by growing organically, Sirma Group sustained a pace of 20-25% annual revenue growth.
With the funds from the IPO the group will increase its capacity on it major markets such as USA and Western Europe where the plan is to strengthen marketing and sales activity and to expand on the US IT market. Management strategy is increasing revenue to EUR 30-40 mln. and in 2020 – a level of EUR 100 mln. revenue to be reached by wrapping up as a serous global company. At this stage listing on a large stock exchange in Western Europe or US will be considered.

Map of Sirma Group Holding markets 

Sirma Group Holding markets map

Major customers

BBC, Financial Times, Euromoney, DK, OUP, Bank of America, Parliament of the United Kingdom, British Museum, Ministry of Defense (DoD) and the Department of Health and Human Services (HHS) of the United States, Library of Parliament of Canada, Government of Canada, National Gallery of Art, Washington DC, Metropolitan Museum of Art, NY, Astra Zeneca, Unicredit Bulbank-Bulgaria and many others.

Shareholders structure

The obvious unique feature of Sirma Group Holding ownership structure compared to Bulgarian experience is the balance, which excludes the domination of one major shareholder. The structure maintains the same participation of 7 shareholders with 10.5%. These people are the same from the very beginning of the business and they managed to sustain the commitment more than 2 decades and still be developing the diversified business towards global position. None of the owners ever made any attempt to change the weights within the structure. Moreover, they have an understanding to be shareholders only in the group without participation in the individual companies they run in order to not give up the strategy of the group vision and synergy. Sirma has also experience with external investors – such is venture capital fund NEVEQ holding 27.5% of Ontotext.

Sirma Group Holding shareholder structure

Financial results

The Group reported 24% CAGR over the past three years vs. 14% CAGR for the market over the same period . Average operating margin exceeds 30% while the net profit margin was av. BGN 0.17 per each BGN 1 revenue. In 2014 the group registered BGN 27.87 annual revenue and 3x profit growth up to BGN 9.78 mln. The 2015 Q1 reports showed BGN 7.04 mln. of revenue, which represented 29.4% increase compared to the same period previous year. 2015 Q1 profit amounts at BGN 385K representing approx. 2x growth compared to January-March 2014.

Highlights of main subsidiaries

Sirma Solutions  is a leading provider in information technologies, consulting services and system integration for mobile and telecom technologies, as well as e-government services.  The company is incubator in computer vision and robotics. Sirma Solutions is a Microsoft Gold Partner, IBM Advanced Partner, Oracle Gold Partner, HP Preferred Gold Partner. It is a provider for state institutions and large corporations.

Ontotext is a global leader as a developer and provider of semantic technologies. The company has worked in partnership with more than 100 universities on joint research projects funded by the EU Framework Programmes. Ontotext has received series of national and international awards for innovation. Main global competitors come from USA and UK. Ontotext products based on semantic technology are being used now by media such as Financial Times, BBC, Euromoney; publishers DK, Oxford University Press, Wiley; pharmaceutical industry – Astra Zeneca, etc.

Look at the latest Ontotext platform video

ENGview Systems holds a second market position in the world with CAD/CAM technology products. It is the developer and provider of an integrated CAD/CAM software for 2D design of folding carton, corrugated and rigid board, and related converting tools. The technology is used from A to Z of the manufacturing process in packaging and printing industry.  It manages the production of leaders such as Heidelberg, Canon, Aristo, etc. The company provides 6 continents with its products.  It is generally expected that this trend in packaging will grow having in mind the increase of environmental-related decisions.

Sirma ITT is the provider of Sirma Enterprise Integration & Collaboration Platform, which represents a technological product for intelligent companies throughout the world that derive its innovations from internal and external knowledge management.   The company has established a market position in USA and plans to expand by offering to medium-sized companies to use technologies that used to be privilege only to the defense industry. The management envisages fast growth in its US business.  Three dimensions of the platform implementation are important. The first is the Conservation space software with a beneficiary the National Gallery of Art in US being in partnership with other museums such as the Metropolitan Museum.  This software will be offered as a cloud-based solution for all museums across the world in 2016. The second implementation is the software for corporation management and the third – for e-government services currently used also by the Bulgarian Government. SIRMA ITT management sees strong expansion in USA followed by a global expansion as an US company with a Bulgarian R&D centre.

How IPO funds will be invested

If minimum number of shares is subscribed at minimum price, the capital raised will be BGN 9.6 mln., which Sirma Group Holding will use to start a US group subsidiary with strong marketing and sales capacity. It will also invest in new R&D unit dedicated to robotics, technologies for medicine and artificial intelligence innovations.

If maximum number of shares is subscribed at the minimum price, the capital raised would be BGN 19.2 mln. Then Sirma Group Holding will open commercial offince in Germany, UK and Asia for some products; would purchase some companies that might contribute by synergy of marketing capacity or additional expertise.

If maximum number of shares is subscribed at the maximum price, the capital raised would be BGN 26.4 mln. Then the group will strengthen the production capacity of its subsidiaries outside Bulgaria and will develop new mobile technologies products, solutions for finance and insurance sectors, healthcare and public communications.

Why invest in Sirma Group Holding shares

This is a company with a proved track of growth which develops on growth markets. It has already established global presence and there is s strategy for shaping as a serious global company. The company will offer dividend policy of 20-40% of the profit annually. According to the latest data of the Bulgarian Association of Software Developers, the growth forecast of the IT sector in Bulgaria is 25% for 2015.

To subscribe shares:

Call/write ELANA Trading brokers at +359 2 81 000 25/26,


Read the research report prepared by ELANA Trading analysts

Source of photo of Sirma Management team: Capital Weekly