HRnet to acquire a majority stake in cloud-based workforce management software, Octomate
- HRnet to acquire a 51% stake in Octomate, a cloud-based workforce management software
- Synergistic whilst enhancing contractor stickiness
- Aligns with management’s indicated criteria for acquisition
- Maintain BUY with unchanged TP of $1.08
HRnet to acquire a 51% stake in Octomate, a fintech startup. The total consideration for the 49% stake amounts to S$676,530.61 while the consideration for the remaining 2% stake will be announced at a later date. According to HRnetGroup’s announcement, Octomate is a cloud-based workforce management software built on the blockchain for maximum security and scalability. It has the ability to power instant payments in areas such as salary, reimbursement of claims, and rewards. It also helps enterprises with onboarding, rostering, and timesheet management. The acquisition is expected to be completed around 10 October 2022.
Synergistic whilst enhancing contractor stickiness. Octomate’s integration with HRnet’s Ease Works app enables contractors to be paid instantaneously once timesheets have been approved. The timely disbursement of salaries and rewards should enhance contractor stickiness as contractors no longer have to wait till the following month to receive their salaries. The integration with Octomate further differentiates HRnet’s offerings which should attract contractors to work for HRnetGroup and its clients.
Small acquisition but in line with management’s communicated strategy for acquisition. While this acquisition is relatively small, it is aligned with management’s indication that acquisitions undertaken need to fulfil certain criteria, such as continued commitment from seller/ vendor and/or aiding in digitisation of workflow. Based on the announcement, it seems that the move checks the boxes. We retain our recommendation and target price.