Argonaut leads $80 million funding of Cordy’s

Cordys Holding B.V., provider of industry-leading business process management suite (BPMS) enterprise software, announced the successful completion of $80 million equity financing representing the singlw largest round of funding for an independent, private BPMS vendor.

Argonaut Private Equity led the round with an investment of $67 million securing a ‘significant minority stake’ in the company, which could be anywhere between 20 and 33 percent.

Headquartered in the Netherlands, Cordys is a global company with over 520 employees in offices in the Americas, Europe, China and India. Cordys currently employs 250 people at its Asia development centre in Hyderabad which is the key to its ability to compete with larger incumbents,

With more than $2 billion under management, Argonaut Private Equity is a diversified global private equity fund. ‘This investment in Cordys demonstrates Argonaut’s commitment to investing in high potential business with strong ties to India,’ said Gagan Kapur, vice president, Argonaut Private Equity. With the investment in Cordys, the total investment by Argonaut in India has reached $170 million in diverse markets.

BMPS’ are the next generation of BPM software. BMPS’ pull together a broader set of tools to provide end-to-end lifecycle support of the business process all within a single model that is shared by all its enabling technologies.

SRIT to acquire Agilent Technologies arm OSI

Sobha Renaissance Information Technology (SRIT), a Bangalore-based software company, is acquiring Objective System Integrators (OSI), a division of the $5 bn-test and measurement company Agilent Technologies, for an undisclosed amount. OSI will provide SRIT a strong foothold in the telecom management solutions space. The acquisition will be funded by SRIT through a combination of debt and internal accruals.

OSI provides software solutions for the integration and management of communications networks and is a major player in the operations support systems in the telecom sector. OSI was acquired by Agilent for $665 mn in 2000 when its revenues were pegged at around $70 mn. As of now, revenues of OSI are around $26-30 mn. It has around 120 people with presence in India and the US. This is SRIT’s second acquisition. Earlier, it had bought Billing Components, a German telecom software company.

SRIT focuses on three verticals, namely, healthcare, telecom and enterprises and currently has around 1500 people spread across 11 countries. It has registered revenues of around Rs. 200 crores for the FY07 and is targeting around Rs. 450 crores in FY08 with Rs. 280 crores coming in the telecom vertical. Currently, it gets 30% of its revenues from healthcare and telecom segment with the remaining from enterprises.

Read The Economic Times article.

Carlyle teams up with Ramesh Vangal to acquire Cambridge Solutions

Private equity giant Carlyle along with serial entrepreneur Ramesh Vangal are said to be the frontrunners in acquiring Cambridge Solutions, one of the largest listed BPO companies. Carlyle may purchase 42% of the other promoters’ stake for sale at $170 mn. The joint bid would control around 60% stake, valued at around $250 mn, in the acquired company, thus valuing the company at an EV of $400 mn. Other firms in the fray include bidders like global IT major EDS, PE firm Apollo and Indian IT company HCL.

The Cambridge acquisition will be Carlyle’s largest investment in India till date. The PE major is joining hands with Mr. Vangal, a co-founder and the largest individual shareholder in Cambridge with 18% stake, is assisting Carlyle in effecting a buyout.

Carlyle’s move to buy is seen in the context of Cambridge, which has substantial revenues locked up in the insurance processing domain that could unleash synergies given its rather large exposure to the insurance sector in the US. Almost two-thirds of Cambridge’s Rs. 1200 crore-revenue comes from high-end BPO operations spread across the US, India and Europe. It has a strong presence in the lucrative insurance processing domain, with around 2000 of its total 4500 employees located in the US.

Read more in The Economic Times article.
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BPO service providers Sutherland, Genpact plans IPO on US bourses

The Economic Times reports that following the lead of the listing of its peers EXL Service Holdings and WNS on NASDAQ and NYSE, respectively, Sutherland Global Services, a US-based third party BPO service provider, is planning a NYSE / NASDAQ listing by the last quarter of 2007 to raise around $250 mn. Private equity firms Oak Investment Partners and Standard Chartered Private Equity (through its Merlion Fund) are invested in Sutherland. Sutherland offers services including process consulting, back-office processing, account management, customer care, technology support across verticals such as technology, telecom, retail, healthcare and banking, financial services and insurance (BFSI). It has about 18,000 professionals on its global rolls, 50% of them based in India and has other global facilities in locations like Mexico, Canada, and the Philippines.

Meanwhile one of the India’s largest BPO firms Genpact is mulling a US listing through an initial public offering to raise over $600 mn for the company and its promoters. The company, previously part of the US-based industrial conglomerate General Electric, is planning to offload about 15% equity through a public float on NYSE / NASDAQ later this year. The company’s major shareholders, GE and US-based private equity firms Oak Hill Capital and General Atlantic, are likely to sell part of their holding through this IPO, valuing the company at around $4 bn. Genpact has appointed Morgan Stanley, JP Morgan and Citigroup for the offering and it may file the regulatory prospectus in the next few weeks.

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Zensar Technologies forms JV with Japan-based EZA

IT and BPO solutions provider Zensar Technologies Limited is forming a joint venture with Tokyo-based IT firm EZA Limited to create Zensar Advanced Technologies to further strengthen its footprint in the emerging Japanese market. The transaction would involve the transfer of all EZA’s existing order book, employees, technology, and intellectual property to the newly formed joint venture.

EZA was incorporated in 1996 and had a turnover of $4.2 mn in 2006, and brings in over 10 years of strong industry experience in Japan. The company has over the years developed products in media server, digital appliances and security space. Its customers include NEC, Japan Railways and Unisys and other retail customers. Having gained technology and domain expertise pertaining to mobile terminals over the years, EZA is now focusing to enter the digital home appliances and security markets.

Read the article in Business Standard.

Financial Technologies sells 1% in Dubai commodity bourse for $12.5 mn

Indian IT company and MCX promoter Financial Technologies has sold a 1% stake in its Middle East-based venture, the Dubai Gold and Commodities Exchange (DGCX), to its partner, the Dubai Multi Commodities Centre (DMCC). The size of the deal is around $12.5 mn valuing the year-and-a-half old DGCX at $1.25 bn. Financial Technologies would now hold a 49% stake in DGCX.

DGCX is an electronic futures and options exchange which utilizes trading, clearing and settlement technology developed by Financial Technologies. The exchange lists futures contracts in gold, silver, currencies and fuel oil. It has recently announced the imminent launch of futures contracts in steel and options contracts on gold. DGCX has also foreshadowed the future listing of various agricultural, metal, and energy products.

Read the article in Business Standard.
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ChrysCapital picks up 15% stake in telecom firm Spanco Telesystems

Networking and system integration company Spanco Telesystems has diluted a stake of 15% stake to private equity firm ChrysCapital. The financial details of the deal have not been disclosed.

Spanco expects to benefit from the domestic IT spend by telecom service providers, defence, state governments as they roll out networks, including SWANs for e governance initiatives. The company has grown revenues and profits at a CAGR of 60% and 108%, respectively over the previous three years and is well positioned to continue on its growth path paved with new initiatives in the arenas of RFiD and enhanced presence in the European and Middle Eastern markets. It has recently been awarded a 10-year, nation-wide outsourcing contract from Indian Railways.

Read The Economic Times article.

Bennett Coleman buys stake in online merchandising company eYantra

Bennett, Coleman & Company has acquired a stake in Hyderabad-based eYantra Industries, a corporate brand merchandising company. Established in 2001 by ex-PriceWaterhouseCoopers consultants, eYantra offers a range of 5000 products across 150 categories. It is headquartered in Hyderabad and has various offices in Mumbai, Delhi, Chennai and Bangalore. More than 15 corporates have partnered with eYantra for their online brand stores, and 100 such online stores are expected to be hosted by the end of this year. eYantra has entered into long term exclusive merchandising contracts with several industry majors like Tech Mahindra, TCS, Accenture, Sasken, HCL, Genpact and ING Vysya Life Insurance.

The company has been growing at a CAGR of 73%. It has now forayed into internet- and intranet-based customized online brand stores. Named eTail, this new SBU will synchronize and energize its online brand store vertical across the globe.

Read more in The Economic Times article.

Chennai-based Xtenza Solutions to form JV in Malaysia with Petrogold

Chennai-based software company Xtenza Solutions has formed a IT JV with Malaysian trading company Petrogold to tap the growing IT market in Malaysia. Petrogold would hold 51% stake in the joint venture.

Xtenza is a subsidiary of US-based Softnet Solutions, which picked up 50% stake in the company from its promoters who now hold the remaining stake. Softnet is headed by an Indian settled in the US and with about 70 employees, has revenues of about $10 mn. It offers solutions that make an organization’s supply chain more efficient by automating some of its transactions with suppliers, logistics providers, dealers and finance agents. Its major domestic customers include Hindustan Zinc, Sterlite, Eicher and L&T.

The joint venture would be based in Kuala Lumpur and would also target Singapore, Brunei, China and Indonesia, with initial thrust coming from Malaysian companies. The company is set to go on-stream by third week of April.

Read The Economic Times article for more details.

Clearstone, SVB invest $5 mn in Indian gaming portal games2win.com

Mumbai-based gaming portal Games2win.com has raised about $5 mn from leading US venture capital firms Clearstone Venture Partners and Silicon Valley Bank Financial Group. This is the company’s first round of venture capital funding, and will be used to upgrade content, hire talent, and build the brand. Games2win will distribute smartcards similar to prepaid cards for mobile phones that allow customers to pay in advance for service.

The online gamers’ population in India is estimated to be about around 3.5 mn people, and this figure is likely to grow 50-100% every year for the next 5-10 years. The growth drivers would be the rapid adoption of the Internet, increased broadband penetration, the growth in Internet cafés, and a sizable middle-class with rising disposable income.

Read more in the Red Herring article.

TCS sells 40% stake Sitel India to JV partner Sitel for $17.73 mn

Business Standard reports that Tata Consultancy Services has divested its 40% stake in the BPO firm Sitel India to US-based Sitel Corporation for $17.732 mn. Sitel India is a joint venture between the Tata Group and Sitel Corporation, formed in 2000, with both parties holding 50% of the equity. Tata International, which holds 10% stake in the JV, has also agreed to sell its stake. The joint venture company provides voice-based contact centre BPO services from India. With over 4000 professionals, the JV is a provider of fully integrated customer care and back office processing services operating from five centers in Mumbai, Hyderabad, Chennai and Gurgaon.

HCL Technologies may bid for Cambridge Solutions

One of India’s premier IT companies, the $1.1 bn-HCL Technologies may bid for Cambridge Solutions, one of the top BPO outfits of the country, valued at around $350 mn. If the deal sails through, it may be the biggest M&A ever in the Indian IT space.

HCL has signaled early interest to acquire around 42% promoter holding put up for sale. The promoters of Cambridge have mandated Lehman Brothers to scout for potential suitors. The promoters of Cambridge, which includes names like ex-McKinsey chief Rajat Gupta, the US-Canadian Bronfman family of Seagram fame, serial investor Ramesh Vangal and former PepsiCo chairman Chris Sinclair, together hold 59.15% stake. It is learnt that Mr. Vangal, who is the single largest individual investor with around 18% stake, is unlikely to offer his shares.

Almost two-thirds of Cambridge’s revenues comes from high-end BPO operations spread across the US, India and Europe. It has a strong presence in the lucrative insurance processing domain, with around 2000 of its total 4500 employees located in the US. HCL has BPO operations at nine centres in India, two in the UK and one in Malaysia, which provide both voice and non-voice services. The BPO operations constitute around 17% of revenues and employ around 10,000 people.

Read the article in The Economic Times.
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IDG Ventures India to invest $2 mn in IT company Manthan Systems

The Economic Times reports that early-stage technology venture capital fund IDG Ventures India is making its first investment of $2 mn, out of a total fund size of $150 mn, in Manthan Systems. Manthan is a retail industry focused business intelligence and analytics software products company. The money raised from IDG Ventures would be utilized to build the sales team and product development teams. IDG Ventures Vice-Chairman and Managing Director India Sudhir Sethi will join the Board of Directors of Manthan Systems.

Cargill Ventures invest $9 mn in IT firm KPIT Cummins

Cargill Ventures, the venture capital arm of Cargill, Inc., will invest a total of $9 mn in Indian IT consulting firm KPIT Cummins Infosystems. KPIT Cummins will issue shares of $4.5 mn on a preferential basis, in addition to warrants convertible into shares of up to $4.5 mn. The warrants will be convertible into shares at the end of 18 months from the date of issue-based on certain parameters.

Cargill is a privately held company with operations in 63 countries and revenues of over $75 bn. Cargill Ventures is a diversified growth-capital investor across the IT, life sciences and IT sectors.

Read more in the Business Standard article.

IFC invests $5 mn in rural banking-focused IT firm FINO

The World Bank PE arm, International Finance Corporation (IFC), will invest up to $5 mn in Financial Information Network & Operations (FINO), a technology service provider offering end-to-end IT solutions that help banks reach under-served rural markets in India. The investment comprises common equity of up to $2.5 mn and convertible preferred shares of up to $2.5 mn.

In India, IFC’s outstanding portfolio is $1.3 bn (as of June 2006) making it IFC’s fourth-largest country of operations. As the private sector arm of the World Bank Group, IFC has been showing interest to develop the Indian rural banking market.

Read The Economic Times article.

Chennai-based IT firm Quintegra acquires firms in US, Singapore

Chennai-based listed software firm Quintegra Solutions has acquired US-based ValleyUS and Jadelite Technologies of Singapore for a total consideration of $ 10.5 mn (Rs. 46.50 crores). ValleyUS cost $9.5 mn, while the Singapore firm $1 mn.

ValleyUS is focused on domains like client-server, legacy, CRM and e-commerce. It has partnership with big five IT consulting firms in the Silicon Valley. Its major client is publishing house CTB McGraw Hill. Others are EBay, Wal-Mart, E-trade, Wells Fargo Bank, Yahoo, Google and BEA Systems. The acquisition of JadeLite, which has award-winning ERP for educational sector, is expected to improve Quintegra’s market share in the education and training management software.

Quintegra had raised a loan of $5 mn from State Bank of India for part funding the takeover of ValleyUS. The balance amount is to be paid on an earn-out model over a period linked to the firm achieving certain milestones. The takeovers will increase his people strength to 600 from the current 400.

The US market accounts for bulk of company’s revenues and the takeover of ValleyUS has synergies to strengthen its presence there. The US firm had clocked revenues of Rs. 53 crores ($12 mn) for the year ended March 31, 2006 and it is projected to achieve Rs. 80 crores ($18 mn) in 2007-08. The Singapore firm is expected to achieve revenues of Rs. 80 to Rs. 90 crores in the next three years.

Read the article in The Economic Times.

The Times Group acquires 5% stake in Ahmedabad-based IT firm

Bennett, Coleman & Company (BCCL) will acquire around 5% stake in Ahmedabad-based IT firm Sai InfoSystem (SIS), for an undisclosed sum. SIS offers total IT solutions to end users comprising hardware, software, networking and related services. It operates in the area of system integration, call-centre solutions and has been focusing on four verticals namely telecom, power, defence and the state government, and has added two more verticals, retail and gaming.

The company may come up with an initial public offering in three years.

Read The Economic Times article.

NYSE-listed Indian BPO major WNS acquires Bangalore-based KPO Marketics Technologies for $65 mn

NYSE-listed WNS Holdings, one of India’s leading Indian outsourcing companies, will acquire Bangalore-based analytics services firm Marketics Technologies for $65 mn in an all-cash deal to consolidate its position in the fast-growing knowledge processing arena. The acquisition will supplement the knowledge business of WNS which provides market research, business and financial research, and analytics services. The existing clients of WNS are in the travel, banking, financial services and insurance industries. With the Marketics acquisition, WNS will add capability in the consumer goods, retail, and media and entertainment sectors. Marketics was started in 2003 by a group of young professionals with backgrounds in marketing, market research and information technology.

WNS will pay $30 mn at the closing of the deal and an additional earn-out payment of up to $35 mn over a 12-month period, financing the acquisition off its balance sheet. WNS has already made three acquisitions: Town and Country Assistance, an auto claims collection firm; ClaimsBPO, the India-based healthcare BPO business of GreenSnow from the US; and an Arizona-based mortgage BPO firm called Trinity Partners. Leading domestic investment bank Avendus Advisors was the advisor to the transaction.

Read more in FinanceAsia.com.

Bangalore-based Teleradiology forms JV with NHG Singapore

Bangalore-based teleradiology services company Teleradiology Solutions has entered a joint venture (JV) with the Singapore-based National Healthcare Group (NHG).

The joint venture company is called Tele Rad, Singapore. It will be based in Singapore and will operate in Asia initially and later spread to other markets. Both companies will invest Singapore $100,000 each. Tele Rad will market the products globally and source work to India. At present, NHG Singapore has nine polyclinics, four hospitals, one national centre and three specialty institutes. Singapore has a Free Trade Agreement (FTA) with the US, and handles hospital needs of the US servicemen both retired and those who are posted in Asia.

For the last three years, Teleradiology Solutions has been servicing NHG Singapore, through a service contract. As part of the contract, 45% of all primary healthcare records totaling 35,000 radiology scans are sent to Bangalore for reading.

For the uninitiated, teleradiology is the remote interpretation of all non-invasive imaging studies such as CT, MRI, ultrasound medicine studies and digitized X-rays.

Read the Business Standard article.

Geodesic Information Systems to buy Chandamama for Rs. 10.02 crores

Software firm Geodesic Information Systems Limited will acquire 94% in children’s magazine publisher Chandamama India Limited for Rs. 10.02 crores. The cash component of the cash-cum-stock deal would amount to Rs. 1.6 crores. Geodesic is planning a makeover of the 60-year old magazine whereby the content would also be available on the Internet and mobile media.

Geodesic provides content over its universal instant messaging system, which is available on desktops, mobile devices and also over Internet radio. Chandamama, with a monthly circulation of around 200,000 copies, will continue to have its own identity. There have been reports in the past of Walt Disney planning to acquire a stake in Chandamama. Geodesic expects to complete the acquisition by March-end, and the consolidation of the accounts will commence from April 1, 2007.

Read more in the article on Reuters.com.

Mastek ends IT services JV with Deloitte Consulting

Mid-sized information technology vendor Mastek Limited is selling out its joint venture with Deloitte Consulting. Mastek had established a 50:50 IT services JV with UK’s Deloitte Consulting in 2001 to offer services like application development, systems implementation and integration and other outsourcing services.

As Deloitte shifted its focus to consulting from IT services, revenues stagnated around the Rs. 100 crore-level for the past three years. Margins, at around 4%, are also significantly lower than Mastek’s own. The company has refused to disclose the valuation of the JV. The viability of the JV was also a question since Deloitte has set up its own centre in the country.

In the last quarter, Mastek had bought out its business process outsourcing JV partner Carreker in their loss making non-voice BPO JV. Last year, Mastek sold its stake in another BPO venture in favour of partner Capita to remain a minority financial investor.

Read more on Mastek in the DNA Money article.

Fidelity National Information Services picks up Second Foundation

Fidelity National Information Services (FIS), a provider of core processing solutions for financial institutions, has acquired Second Foundation, an IT services company headquartered in California, for close to $20 mn. The buyout is in line with Fidelity’s expansion plan in its offshore presence in India. Second Foundation is a provider of offshore global information technology services. With this FIS’ wholly owned subsidiary, Fidelity Business Solutions now gets a foothold in Bangalore and Chandigarh, where Second Foundation has significant presence.

Avendus Advisors was the exclusive advisor to Second Foundation. The company has extensive experience in a multitude of areas, including outsourced product development, quality assurance and business intelligence services as well as implementation services of third-party software applications. The Second Foundation team will continue to support its existing clients and augment current global delivery capabilities.

Prior to the acquisition, FIS operated in India, through its Indian partner Covansys Corporation, an IT services company. FIS will continue its relationship with Covansys Corporation, which will be primarily dedicated to internal software application management. Also, since the operations of Covansys were essentially BPO oriented, FIS wanted to look at an IT services company that has expertise in other areas as well. Currently, FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top 10. Approximately 50% of all US residential mortgages are processed using the FIS software.

Second Foundation, which was incepted in 1997 has reached significant scale, and is looking and getting on to the global platform, leveraging on FIS’ international presence. The company specialises in business intelligence, software security, and web services solutions. Last year, the company embarked on a major expansion in Europe and established development centres and sales offices in Prague, and Liverpool. The company has projects underway in major corporations in the UK, Czech Republic, France and Norway.

Read The Economic Times article.

UTI Ventures and Argonaut Private Equity invest Rs. 44 crores in Chennai-based IT company Zylog Systems

Private equity firms UTI Ventures and US-based Argonaut Private Equity are investing around Rs. 43.8 crores (around $10 mn) in Chennai-based Zylog Systems Limited (ZSL). The investment will be done through preferential share allotment. ZSL is a 12-year old IT services and outsourcing solutions company with around 750 employees in India, the US and Europe, offering services in web application, mobile computing and enterprise infrastructure management. It has a specialized product called DP Online, a depository operations and a financial accounting system.

The investments will facilitate the company’s access to clientele in new target markets. For the year ended March 2006, ZSL’s revenues stood at Rs. 257.8 crores, a 75% growth over the previous year, and its post-tax profits were at Rs. 37.13 crores.

Argonaut Private Equity has a corpus of over $2 bn and is present in India since 2003. It has invested over $75 mn in Indian companies, predominantly in the IT and other technology sectors. UTI Ventures has substantial investments in the technology and IT services sector, including Subex Systems. This is the second time that the two private equity firms have come together to invest in a single entity. Earlier, the two funds invested a total of $16 mn (Rs. 72 crores) in Koutons Retail, a Rs. 450 crore-menswear retailer.

Read The Economic Times article.

BPO major Genpact buys European SAP firm ICE Enterprise Solutions

BPO services provider Genpact has acquired Europe-based SAP service provider ICE Enterprise Solutions. ICE was established in 1996 and specializes in serving large European multinationals in the manufacturing, utilities, oil & gas, insurance, and financial services industries. It is a SAP Services Partner, Utilities Partner, and BW/SEM Partner in the Netherlands and an SAP Partner and StreamServe Partner in Spain. The terms of the deal have not been disclosed.

Genpact operates a wide range of business processes from its global delivery platform for clients around the world including GE, Nissan, Wachovia, Kimberly-Clark, Genworth, Air Canada, Penske, the Linde Group and more than two-dozen other global enterprises in North America, Europe, Asia and Australia. Genpact has ERP, application and IT professionals based in India, China, the UK, and the US. It is also one of the world’s largest providers of Oracle E-business suite solutions.

Read the articles in Business Standard and The Economic Times.

ICSA not to sell 14% stake to CVC International; may sell the same to Goldman Sachs

ICSA, a Hyderabad-based embedded technology and electrical infrastructure solutions provider, which was reported to have raised $52 mn from CVC International and Goldman Sachs, now, seems to have excluded CVC International from its investor list.

ICSA will sell 14% equity to global investment bank Goldman Sachs, which will infuse the entire $52 mn to be pumped into the company, part of it for the equity and the rest in foreign currency convertible bonds (FCCBs).

ICSA will not sell equity to Citigroup Venture Capital International Growth Partnership Mauritius (CVC). The company has cited non-fulfillment of regulatory and technical conditions for not going ahead with CVC. The venture capital firm had a 45-day due diligence period, but could not complete the proceedings in time. CVC had sought an extension, but failed to get it from the market regulator SEBI. ICSA was also not in favour of extending the deadline.

Goldman Sachs is believed to have evinced interest in acquiring the 14 per cent stake at higher amount. The deal with CVC was at around Rs. 950 per share, while Goldman Sachs’ offer is at Rs. 1250 per share. This is in addition to Goldman Sachs’ commitment of $22 mn in ICSA through FCCBs.

Goldman Sachs will now hold 14% stake in ICSA and FCCBs to the tune of $22 mn. ICSA is convening a board meeting on March 17 to consider the Goldman Sachs offer.

At present, foreign institutional investment holding in ICSA stands at 25.37%. The company was looking at the investments to meet its working capital requirements, for inorganic investments and R&D related expenses.

Read the Business Standard article.
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RPG Group to buy out Fujitsu’s stake in Zensar Technologies

The Economic Times reportsthat the RPG Group has entered into an agreement with Fujitsu of Japan to buy out the latter’s stake in Zensar Technologies Limited. Zensar is a 50:50 IT joint venture between Fujitsu and the RPG Group. The 6.9 mn shares held by Fujitsu will be bought by Jubilee Investment and Industries Limited, an RPG Group company.

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The PVP Group picks up 51% in software training and real estate firm SSI

PVP Group has acquired a 51% stake in Software Solution Integrated (SSI) from the promoters, led by Kalpathi Suresh, for Rs. 613.14 crores. The stake sale would be followed by a mandatory public offer which is said to cost the PVP Group an additional Rs. 239.20 crores for 120 acres of prime land bank in Chennai and Ooty.

SSI was started more than 13 years ago as a software training company, which ventured further into software development and later into real estate. The SSI shareholders now have an option to exit when the acquirers make public offer to them at Rs. 208 a share.

For more details, read The Times of India article.

BPO firm HOV Services acquires US-based firm Lason for $148 mn

Pune-based HOV Services has acquired US-based Lason for $148 mn (about Rs. 660 crores). The acquisition was completed through HOV’s US wholly-owned subsidiary HOV Services LLC and was funded by HOV Capital, Merrill Lynch and Apollo Management; the three of them have invested $63 mn, rest of the acquisition has been funded by debt.

HOV had recently acquired Tracmail and SAM Holdings for $3.74 mn. The Lason acquisition will help HOV gain entry in new business verticals like transaction processing, healthcare and media. Lason has an Indian subsidiary based in Chennai, with a headcount of 8000. It also has presence in China (1200 people), Mexico (250 employees) and North America.

Read more in the Business Standard article.

EDS to buy Bangalore-based software testing company RelQ for $40 mn

Bangalore-based RelQ Software has finalized a deal worth $40 mn to be acquired by IT consulting major Electronic Data Systems (EDS). RelQ specializes in software testing, validation, verification and quality assurance. It has 800 people and posted revenues of $22 mn last fiscal. It is expected to record revenues of $30 mn in 2006-07.

RelQ will help the $21-billion EDS, which focuses on consulting, application management, maintenance, re-engineering, migration, technical support and testing, to ramp up its testing practice in India. EDS has over 17,000 employees here across varied verticals.

Read The Times of India article.
Related Post: Software testing company up for sale by stakeholders ICICI Ventures and Acer Technologies

Zensar Technologies buys US-based IT firm ThoughtDigital for $24.9 mn

Zensar Technologies has acquired the US-based ThoughtDigital and its holding company SOA Software for $ 24.9 mn. ThoughtDigital focuses on Oracle applications. The acquisition puts Zensar in a position to become one of the top 10 organizations for Oracle implementation globally. The acquisition will be funded through a mix of debt and internal accruals, with 60% coming from borrowings. The all-cash deal is structured with earn-outs to be paid over two years.

ThoughtDigital had revenues of $27 mn and an operating profit of $3 mn in 2006. It employs 120 Oracle consultants and its customer base includes firms like Gartner, Cingular Wireless, Primavera and USPS.

Read The Economic Times and Business Standard articles.

Firstsource Solutions, 24/7 Customer to merge

India’s fifth-largest BPO Firstsource Solutions (formerly ICICI OneSource) and 24/7 Customer, the tenth-largest, are planning to merge themselves in a move which would usher in a whole new era of consolidation in the Indian BPO / ITeS industry.

It is reported that Sequoia Capital is behind this action, which has substantial stakes in both companies. An array of strategic investments has been made in Firstsource by Sequoia, Temasek, Metavante and ICICI. In June 2003, Sequoia had led the $22 mn funding in 24/7 Customer. Firstsource employs over 10,717 people; 24/7 has 5500 people on its rolls.

Read the article in DNA Money.

Infosys eyes UK-based SmartStream Technologies; deal valued at £100 mn

Indian IT behemoth Infosys may acquire UK-based SmartStream Technologies, a solutions provider for financial services sector, for over £100 mn. Headquartered in London, SmartStream has direct operations across Europe, New York, Sydney, Beijing, Singapore and Mumbai.

SmartStream has more than 70 of the world’s top 100 banks as its clients and has 38% share of the transaction lifecycle management solutions market. The acquisition of SmartStream will be Infosys’ second major one, after it acquired an Australian IT firm for $22.9 mn in 2003.

Buyout fund TA Associates holds 60% stake in SmartStream. TA acquired the company around 18 months back after the exit of 3i, which supported a management buyout in 2000.

Read more in The Economic Times article.

Canaan Partners to invest in 3 companies; deals to close by year-end

Canaan Partners, a US-based early-stage venture capital firm, which was last year in the news for its $2.5 mn investment in online matrimonial portal BharatMatrimony.com, has short-listed three more such deals. These are likely to get funding by the end of the year. The company is also exploring options to bring an Indian adaptation of Shutterfly, a US-based photograph printing and publishing portal.

Canaan Partners is looking at investing $2-5 mn in the first phase and around $15 mn in the next stage. The companies identified are all technology-based; however, it is also looking at start-ups in the services and telecom space.

The VC firm has an office at Gurgaon and is planning to set up two more offices this year in Mumbai and Bangalore. Canaan Partners has a cumulative capital investment capacity of $450 mn. In 2000, the venture capital (VC) firm had invested in Aztec Software, a software development firm, and in e4e, a diversified business-outsourcing firm.

Read the Business Standard article.

Teledata Informatics buys majority stake in eSys Technologies for $105 mn

Teledata Informatics, a Chennai-based IT company has acquired a strategic majority stake in eSys Technologies for $105 mn. The promoter of eSys, Vikas Goel, would continue to hold 49%, in the company. eSys Technologies is a Singapore-based distributor of hard drives and PC manufacturer. eSys is a $2 bn-privately-held firm started by an Indian entrepreneur. Teledata provides software and solutions for the marine, education, telecom and utility sectors. Teledata has picked up the stake in the Singaporean company through a fresh infusion of capital.

eSys derives nearly 95% of its revenues from distribution and manufacture of hardware. It distributes hard disk drives and other computer components. It also produces personal computers, some under contract manufacturing, while it also sells under its own brand name. eSys now manufactures more than 2 mn PCs annually at its facilities in Singapore, India, US and the Middle East.

Read the article in The Economic Times.

Orissa considers VC fund for IT SMEs

Orissa is considering setting up a Venture Capital Fund (VCF) for small and medium IT enterprises in the state. This is in line with plans to set up a National Venture Capital Fund (NVCF) for IT SMEs, currently pending with the Planning Commission (See Related Post).

Currently, the Orissa STPI (Software Technology Park of India) has a catalogue of 100 registered IT / ITeS companies, of which only 5% are in the big league and the remaining are IT SMEs.

Orissa’s current software exports stand at Rs. 465 crores. Around 85% of Orissa’s software export earnings are from Infosys and Satyam. Of late, TCS, Wipro, MindTree and Hexaware are also planning forays into the state. Around Rs. 1000 crores has been invested in the IT / ITeS sector in the state, as per estimates.

Read the Business Standard article.

Govt contemplates Rs. 100 crore-venture fund for IT SMEs

The Ministry of Communications and Information Technology is considering creating a national venture capital fund to support small and medium enterprises in the IT segment. The fund is to be established by Software Technology Parks of India (STPI) and the Ministry has asked for a grant of Rs. 100 crores for the same. The VC fund would also mobilize resources from state governments and financial institutions.

The proposal has been sent to the Planning Commission for consideration. The initial corpus of the fund will be determined after the partners of the fund are finalized. The proposal comes as a follow up of the success of the Rs. 15 crore-Karnataka Information Technology Venture Capital Fund (KITVEN) created by the Small Industries Development Bank of India (SIDBI) and the Karnataka state government.

Earlier, the Ministry had contributed to the National Venture Fund for Software and IT Industry (NFSIT) set up by the Small Industries Development Bank of India (SIDBI) in 1999. The fund is likely to operate till 2009. NFSIT has invested in 30 small and medium IT enabled and software services and products companies.

Read The Economic Times article.

ChrysCapital sells Global Vantedge BPO to Essar-owned Aegis Communications

ChrysCapital has sold one of its portfolio companies, Global Vantedge, a credit and receivables management BPO to the Essar-owned Aegis Communications for around Rs. 100 crores. ChrysCapital had set up the Global Vantedge in 2001 and owned 75% in the firm. Global Vantedge is headquartered in the US and employs around 1500 people in two centres in Gurgaon. It specializes in credit and receivables management and its customers include credit card, telecom and auto companies, mostly in the US and UK.

Aegis has a turnover of around $180 mn and employs over 9000 people in India and USA, operating from 24 centres and 18 cities around the world. It offers multi-channel customer relationship management services including customer acquisition and customer services, back office services, as well as value-added services. These services are offered across verticals such as telecom, retail, financial services, energy, education and logistics. The credit and receivable management services of Global Vantedge will strengthen Aegis’ customer relationship management portfolio. Essar and Deutsche Bank had bought 80% share in Texas-based Aegis Communications for $28 mn in November 2003. Subsequently, the Essar Group increased its stake in the company.

Read The Economic Times article.

Tatas offload 0.84% in TCS for Rs. 1000 crores

Tata Sons, the holding company of the Tata Group, has raised more than Rs. 1000 crores by selling 0.84% of its equity stake in group company and software major Tata Consultancy Services (TCS). This has taken the total amount raised so far to about Rs. 2800 crores (about $622 mn). It is believed that the proceeds could be used for part-funding Tata Steel’s $12.1 bn-acquisition of Corus.

Tata Sons has sold about 8.1 mn equity shares of the software company to an undisclosed buyer. This is the third time in three months that the holding company has diluted its equity stake in TCS, which on December 31, 2006, stood at 78.3%. On February 6, Tata Sons sold 6.9 mn equity shares raising Rs. 900 crores. In a similar transaction in November 2006, Tata Sons raised another Rs. 900 crores by diluting 0.86% of its stake in TCS. A bulk of it was sold to Mauritius-based HSBC Global Investment Fund.

Read the article in The Economic Times.

GVFL to invest in 4 companies in the IT and biotech sectors

Gujarat Venture Fund Limited (GVFL), the Ahmedabad-based venture capital fund, plans to invest in four companies at seed and early stage-level in information technology and biotech sectors. The investments would be made out of the Gujarat IT Fund (corpus – Rs. 20 crores) and the Gujarat Biotechnology Venture Fund (corpus – Rs. 50 crores).

GVFL is evaluating several proposals including those from the IIM-Ahmedabad incubator and NirmaLabs for making these investments. The deals are expected to be announced soon. The fund is also looking to divest its stake in some of its portfolio companies such as eInfochips, Icenet and Anupam Globalsoft this year as they have matured and are capable of giving optimum returns.

GVFL had divested from 6 of its investee companies in 2006 including Saraf Foods, Scicom Technologies, Parsec Loans, Broadcast Worldwide, Technology Media Group and Apex Electricals. These exits were made through strategic buyouts by promoters or other investors. Private equity player Baring Private Equity picked up part of GVFL’s stake in Gurgaon-based Parsec Loans for around Rs. 15-16 crores. In Noida-based Scicom Technologies, the promoters and employees of the company bought out GVFL’s stake.

GVFL had recently closed its Rs. 24 crore-first fund called the GVCF 1990 with substantial profits. The biotech fund, set up with help from Gujarat government, has invested Rs. 2 crores in Celestial Biologicals, an Intas Pharma subsidiary. Celestial Biologicals makes protein drugs by plasma fractionation. In the last 16 years, GVFL has raised five venture capital funds with a combined capital of Rs. 140 crores and has made investments in 58 companies.

Read The Economic Times article.

EMC Corporation buys Hyderabad-based data security company Valyd Software

US-based IT firm EMC Corporation has acquired Hyderabad-based Valyd Software for an undisclosed sum. Valyd is an unlisted, IP-driven, enterprise data security company. It will now become part of EMC’s security division. Valyd’s products will be integrated to EMC’s global product offering. Valyd will bring to the board two specific enterprise data protection products, namely, the file security manager and the data security manager. These will come under the fold of RSA, a key global acquisition made by EMC in the information security domain.

Valyd was founded in 1998 and came out with its products in 2001. Post acquisition, Valyd founders Srinivas Sreeramaneni and Anil Meka will continue to oversee operations at Valyd. The company has over 50 engineers in the security software solutions space and the EMC acquisition will lead to a quick doubling of headcount by the end of 2007.

Read the article in The Economic Times.

Moser Baer buys Philips’ optical R&D tech unit OM&T

Phillips is selling its 100% subsidiary OM&T, a specialized optical R&D technology company, to Moser Baer India (MBI). The acquisition will complement the existing cutting edge technology research being done in Moser Baer’s R&D centre in India and help it to further consolidate its position in the optical media market. All IP created by OM&T will be transferred to Moser Baer.

Read the Business Standard article.

Tata Consultancy Services to raise funds to hedge forex risk

The Times of India reports that Tata Consultancy Services is planning to raise funds reportedly of around $200 mn to manage risks on its foreign exchange exposure. TCS earns nearly all its income in foreign exchange and volatile exchange rates impact its margins. J P Morgan will be managing the transaction. Citigroup, ABN-AMRO, Standard Chartered and HSBC are in touch with TCS on the same. The exercise is part of TCS’ treasury management as it includes significant forex component. The possibilities include of either going in for a forward contract or a mix of forward contract and options.

SemIndia buys Exalted Networks for $8 mn; in talks with PE funds for buying more

SemIndia has acquired Bangalore-based fabless semiconductor company Exalted Networks in an $8 mn cash and stock deal. SemIndia is setting up a $3 bn silicon wafer fabrication unit. Exalted Networks has now been renamed as SemIndia Systems Private Limited, and has 100 engineers working for it. The company is expected to close the current financial year with a turnover of Rs. 100 crores. It has already started marketing third-party products with the SemIndia brand in the country. It has shipped out the first batch of ADSL modems made by co-investor Flextronics to BSNL.

SemIndia is close to closing two similar deals like Exalted. The target companies have not been named yet. It is also understood that AMD, which is till now a technology partner in the $3 bn wafer fabrication unit, will pick equity along with the government. It is also scouting for ATMP units in Thailand, Malaysia, Singapore and Taiwan. These acquisitions will be in the range of $100-200 mn and there could be at least three such deals. Additionally, it has also initiated talks with global private equity funds to raise the money for acquisition of Assembly, Testing, Marking and Packaging (ATMP) plants and fab units across the world. The local fab units will cater to the domestic market, while the overseas fab units, which could be ultimately shifted to India, would initially cater to customers abroad. SemIndia may not buy old fab units and will focus only on acquiring new equipment.

The SemIndia consortium has been promoted by former McGill University don Vinod Agarwal, the world’s second largest chip-maker AMD, fabless ASIC semiconductor design and manufacturing giant Flextronics, private equity fund Sandalwood Partners and others.

Read the article in DNA Money.

Genpact plans largest IPO on US markets by an Indian company at $500-600 mn

Genpact, India’s largest BPO company has finalized its IPO in the US markets as it plans to raise between $500-$600 mn and will list on the New York Stock Exchange. This will be the largest IPO by an Indian company in the US. The Genpact board has approved the issue and has appointed merchant bankers Morgan Stanley and Goldman Sachs for the issue.

The public issue is important as Genpact is the largest BPO company in India, and the issue will fulfill the huge demand for Indian BPO shares in the US market. The issue will also affect the valuations and demand for two other Indian BPO firms that went public last year: WNS, which got listed on NYSE, and EXL Services on NASDAQ. Both WNS and EXL saw a huge demand for their shares when they went public and even after the issue, they command very high valuations.

Genpact is owned by General Atlantic and Oak Hill Capital, who jointly control 60% of the equity of the company. The two funds had picked up the stake in Genpact in 2004 and in two years, have increased the value of their holding by five to six times. This is a fairly high rate of return for the investment made by a private equity funds. The remaining 40% is owned by US conglomerate GE.

The IPO is not likely to see a huge sale of shares by the existing shareholders. Bulk of the issue will be fresh issue of shares and the funds will be available for Genpact to fund growth. While the private equity funds Oak Hill Capital and General Atlantic are not expected to sell their holding, the value of their stake will go up substantially.

Read more in The Economic Times article.
Related Post: Oak Hill Partners may merge portfolio companies Genpact and Vertex; merged entity to be listed

MindTree Consulting IPO opens on Feb 9; priced at Rs. 365 – 425

MindTree Consulting Limited, an IT services company, is coming out with its maiden public offering of its equity shares, which opens on February 9, 2007 and close on February 14, 2007. The company proposes to offer 55.9 mn equity shares of Rs. 10 each at a price band of Rs. 365/- to Rs. 425/- per equity share through a 100% book building process method. The issue will constitute 15.00% of the post-issue capital of the company. Kotak Mahindra Capital, JM Morgan Stanley, JP Morgan and Macquarie are the managers to the issue.

MindTree is organized into two divisions – IT Services and R&D Services. IT Services comprise IT strategic consulting, application development and maintenance, package implementation and product engineering services. The IT Services business unit offers such services mainly to industries such as manufacturing, travel and transportation, banking, financial services and insurance. R&D Services are organized into two divisions – Engineering, which provides product realization services including architecture and design, re-engineering and product assurance to technology and product firms; and Research, which conceives and develops intellectual properties, primarily in the short-range wireless communication segment and licenses and customizes such intellectual properties for clients.

Read the press release here.

In a related development, MindTree is about to acquire a domestic semiconductor design company in an all-cash deal. The target company is reported to employ around 200 people. It has a sales presence in the US and a delivery centre in India. MindTree has signed a non-binding term-sheet with this firm and due diligence is on. It expects the acquisition to add to its IC (integrated chip) design capability and will also bring in new customers. This will be MindTree’s third acquisition in its seven-year history. The company had earlier made two acquisitions, the software division of ASAP and its subsidiary in September 2004 and Linc Software Services in June 2005.

Read the article in Business Standard.

Software testing company up for sale by stakeholders ICICI Ventures and Acer Technologies

Bangalore-based independent software testing company RelQ has been put up for sale by ICICI Ventures and computer-maker Acer Technologies of Taiwan, the majority shareholders of the company. UBS is working on the mandate of bringing in the potential buyer. Companies such as KPIT Cummins, NIIT and CGI have already shown interest in buying RelQ.

RelQ is present in test automation, game testing and embedded software testing and has invested around $3 million towards infrastructure and test labs. RelQ is growing at a CAGR of 40% with revenues of $21 mn for the FY 2005-06 and estimated revenues of $33 mn for the FY 2006-07. It has a major presence in Bangalore with offices in the US, Europe and Singapore and a headcount of around 800. It has already acquired two companies, one in France and in the UK each.

The global market for testing services is estimated to be at $15 bn, of which $2-6 bn is expected to be outsourced to India by 2007. The CAGR for the independent outsourced testing market is estimated to be over 60%. Maveric and Thinksoft in Chennai and AppLabs in Hyderabad are some of the prominent independent testing companies in India.

Read the article in The Economic Times.

Oak Hill Partners may merge portfolio companies Genpact and Vertex; merged entity to be listed

US-based private equity firm Oak Hill Capital Partners is reportedly working on merging its two BPO portfolio companies, Genpact and Vertex Data Systems.

Oak Hill and General Atlantic bought 60% in Genpact in 2004 from GE for around $500 mn. Vertex Data Systems, a BPO subsidiary of UK-based United Utilities, was bought out by an Oak Hill-led consortium comprising GenNx360 and Knox Lawrence International in a $425 mn cash, debt-and-liability readjustment deal.

Genpact employs around 27,000 people and has a dominant presence in India and operations in China, Hungary, the Philippines, Romania, the US and Mexico. It serves the banking/financial services, insurance, manufacturing, transportation, automotive and business services verticals. Genpact is understood to have revenues of close to $650 mn (Rs. 3000 crores) and is targeting $1 bn by 2008.

Vertex has around 9000 employees, roughly 1500 of them in India, with 12 units in Europe, the US, India and Canada. It offers a range of services across private enterprise, financial services, utilities, and central and local government sectors.

The merged entity would raise an initial public offering (IPO) that may be listed on a foreign or domestic bourse. The merger will allow investors to maximize efficiencies in the two companies’ overlapping verticals and geographies and leverage their separate areas of expertise.

Read the Business Standard article.

The Times Group buys stake in Hyderabad-based IT company

Bennett, Coleman & Company Limited (BCCL), the parent company of The Times of India and The Economic Times, has acquired a stake in Hyderabad-based IT products company SatNav Technologies. SatNav is a pioneer in products in navigation, telematics and business infrastructure management. It was founded under the Satyam entrepreneur incubation program focusing on services and products. In 2004, SatNav took over the products developed by Satyam Navigation and is today an independent venture run by ex-Satyam employees. The company is expanding its customer base across the globe; it already has partners in eight countries, The company’s client list includes ICICI Bank, Genpact, Satyam, ISB, UBS and HSBC.

Read the article in The Economic Times.

RPO company gets Rs. 150 crores from angel investors

Elixir Web Solutions, a recruitment process outsourcing (RPO) company, has received angel funding of Rs. 150 crores. It will invest over the next two years to set up a knowledge centre in Dehra Dun and for the acquisition of a mid-sized company in the US. The Rs. 20-crore company is growing at 250% year-on-year basis and is expecting to capture 10% of the Rs. 6000 crore-RPO market this year.

The company has invested Rs. 4 crores in Pune for setting up of our deliver centre. Over the next two years, the company will invest Rs. 60 crores in the Dehra Dun Software Technology Park of India (STPI) for setting up of a 2000-seater knowledge centre and the back office operations. It is also planning a delivery centre in Goa STPI.

The company is currently present in the US, UK, Canada and Australia through channel partners. It is now looking at establishing a greater global presence in the US through an acquisition of a mid-sized web solutions company with revenues of Rs. 30 crores and would announce the acquisition by August. By 2008, the company plans to set up its own delivery centre in Eastern Europe in Romania. The expansion includes ramping up of its headcount of 450 people to 600 people by the end of the fiscal. As for Pune, it will grow from 60 people to 120 people. Elixir caters to 14 verticals, which include IT/ ITeS, life sciences, media, research and analytic, aviation, FMCG, and logistics.

Read the article in Business Standard.

Chennai-based IT company Teledata in a $200 mn buyout in Singapore

Teledata Informatics, a Chennai-based software company, may make its second acquisition in Singapore following its Jan 12 acquisition of IT services company Soltius Private Limited. The company is into systems integration; the deal is valued at around $150-200 mn. The name of the company has not been disclosed.

Teledata Informatics offers enterprise-wide solutions for marine, education and utility sectors, apart from providing e-learning training and solutions. Teledata had acquired Soltius through its Dubai subsidiary, Bitech International. Soltius offers technology business solutions and services that focus across horizontals such as enterprise resource planning (ERP), business-to-business integration, mobile solutions, systems integration and product implementation, among others.

Article in Business Standard.