Skynet: From local business challenges to global triumph

JULY 2023

From local business challenges to global triumph: the power of strategic financial partnerships

In the current economic climate in South Africa, businesses are facing significant challenges. However, with the right financial partner and management approach, it is possible not only to survive but to thrive, as demonstrated by SkyNet Worldwide Express' remarkable journey over the past three and a half years. The company has transformed from a struggling enterprise into a global success story, thanks to strong leadership and a strategic partnership with RMB Ventures*.

SkyNet Worldwide Express is part of an international business network operating as independent locally owned entities. Despite being one of the first courier companies to embrace owner-drivers and black economic empowerment, inadequate strategic direction and decision-making had left the organisation in a precarious state, even before the disruptive impact of the Covid-19 pandemic.

When Tommy Erasmus assumed the role of CEO in March 2019, the business faced significant challenges, with investors hesitant to continue their support. This dire situation threatened the livelihoods of 1,500 employees, 500 owner-drivers and their dependants.

"I recognised an opportunity not only to save the business and preserve nearly 2,000 jobs but also to establish it as a formidable global player," says Erasmus. He approached RMB Ventures, with whom he had previously collaborated, in 2022 and together they undertook the task of restructuring the local business before expanding its operations on an international scale.

Finding a niche

SkyNet's recent success can be attributed to a change in approach, shifting from trying to cater to all markets to specialising in high-value freight and specific niche verticals. A strategic partnership with Fidelity ADT allows SkyNet to transport valuable cargo with best-in-class products giving peace of mind in a sector characterised by traditionally high levels of syndicated theft, often with a violent outcome.

Locally, the owner-driver model has proven mutually beneficial, as drivers earn income to support their independent small businesses, while SkyNet both supports government empowerment initiatives and embraces an asset light operating model and in so doing optimises running costs to the benefit of its customers. As part of their expansion plans, SkyNet invested in Droppa, an on-demand delivery service, with the aim of integrating it into the wider SkyNet network. SkyNet is also collaborating with SPAR2U, SPAR's local grocery delivery service, and partnering with Yethu to utilise taxi space for deliveries to townships during off-peak hours.

The company has invested and continues to invest in insourced IT and risk mitigation capabilities, enabling agile solutions which proves particularly advantageous in the growing eCommerce sector. Added to these investments, the extensive SkyNet network has been developed over years to fulfil the urgent needs of loyal blue-chip customers, lifesaving pharmaceutical deliveries and government institutions that require delivery beyond major metropolitan cities into the most rural of areas. This has resulted in arguably the most extensive domestic network in the industry, providing both quick reach and a wide product range throughout the country.

Punching above expectations

Although SkyNet has been an international brand for over 35 years, the global structure was disjointed. Erasmus recognised an opportunity to reorganise and consolidate the global entity. As CEO of the South African operations, together with RMB Ventures, he spearheaded the acquisition of SkyNet in the United Kingdom, which accounts for the majority of global volume in the SkyNet network, effectively elevating a local business onto the global stage. Subsequent acquisitions in Belgium and Germany formed the foundation of an aggressive global strategy that will continue to ensure presence and control in all critical international logistic gateways. This will leave SkyNet competing on even terms with the larger international Courier and Express Parcel players. 

More than just investment

Integral to SkyNet's growth journey has been RMB Ventures, not merely acting as a private equity partner but becoming an active soundboard to the management team. Their goal is to add value and walk the path to success together while leaving the management team to execute on day-to-day operations.

"We don't just invest in businesses; we back people. People are the ones with ideas, and we work with them to support their success," says Andrew Aitken, Co-Head of RMB Ventures. "Our longstanding relationship with Tommy, built on trust and exploration of new opportunities, led us to eagerly embrace his ideas for SkyNet."

RMB Ventures with their experience and track record, provides the funding and mentorship necessary to realise Tommy Erasmus' strategic vision. Over the past few years, they have worked hand-in-hand to transform a strained business into a thriving enterprise with ambitions for global expansion and further acquisitions in the future.

"The funding and mentorship from RMB Ventures, combined with our flat management structure, have been crucial in creating an agile business supported by a unique strength of partnership. Despite our size, we operate with a start-up mindset, making swift decisions that align with our financial goals, with RMB Ventures firmly supporting our endeavours," adds Erasmus.

From its humble origins as a South African business, SkyNet's journey to international success, coupled with its investments in local industries and expansion, serves as an inspiration and a testament to the value of strong management, leadership, and strategic financial partnerships that pave the way for success.

*RMB Ventures invests in SkyNet alongside black-owned investment firm New GX Capital Holdings and Bopa Morua Private Equity Fund.