Infy BPO to buy captive operations of clients

Infosys BPO, the back-office arm of India’s second-biggest software exporter Infosys, plans to acquire captive operations of customers, the company seeks to grow its share of the $80-billion global BPO market. Almost two years ago, Infosys BPO acquired back office operations of Philips, which assured around $250 million in revenues over the next few years. The acquisition helped Infosys gain entry into Poland and other European countries. “We are open to similar takeovers if the right deal comes through,” Infosys BPO CEO Amitabh Chaudhry said. “We are not looking at opening any new centres across the globe, but if such a deal comes along that requires them to have a facility, then we would go ahead.” Infosys BPO entered into a seven-year contract with Royal Philips Electronics of Netherlands to provide finance and accounting services and the processing of purchasing orders in a deal valued at $250 million. The Philips centres are turning profitable, Mr Chaudhry added.

SafeNet India Takes Over Aladdin India Operations

SafeNet, a global provider of information security, has established common management for Aladdin Knowledge Systems and SafeNet. This comes as a result of Aladdin's acquisition by Vector Capital, SafeNet's private equity owner. With this, the Indian operations of both the companies will now be looked after by Rana Gupta, Business Head, India & SAARC, SafeNet. Aladdin is expected to be fully integrated into SafeNet in the future. "This acquisition has brought in great opportunities for the customers as well as the channel partners. With this acquisition, SafeNet has become the clear leader in the rights management and enterprise data protection solutions space," informed Gupta.

Source: Channel Times

Oracle-Sun deal - Impact on India

Oracle’s acquisition of Sun Microsystems will create a $1.5-billion (Rs 7,474 crore) entity in India, and help Oracle compete more effectively with arch rival IBM by bundling its business software with Sun’s computer servers, and offering them at competitive rates to customers in the country. This transaction will help Oracle address newer segments of India’s $34 billion market (Forrester estimate) for IT products and services, and increase its share of the overall enterprise software services market. Customers, such as Punjab National Bank (PNB), which already uses hundreds of computer servers from Sun Microsystems and runs several applications through Oracle’s database software, this transaction will surely add value. “Since we have both Oracle and Sun as important vendors, this acquisition will bring a lot of value,” said RIS Sidhu, chief information officer (CIO) of PNB. According to Dataquest, Sun Microsystems India had revenues of Rs 1, 674 crore, while Oracle India’s revenues were estimated to be around Rs 5,800 crore last year.

Wipro Buys Nokia Mobile TV Technology Unit

The world's top cellphone maker Nokia has sold its enterprise mobile TV unit to India's Wipro, a spokesman for Nokia said on Monday.
The Mobile Broadcast Solutions unit had about 40 employees and created software and hardware which enabled the mobile TV technology on the phone to find and access the broadcasting network.
"We wanted to focus on the consumer side of things, the mobile TV client in the devices, rather than on the business-to-business side," said the spokesman.
Mobile television broadcasting, the hottest upcoming feature for cellphones only a few years ago, has found little demand anywhere in the world.

Oracle buys Sun Microsystems

world's number two software company, Oracle Corporation, today agreed to buy hardware company provider Sun Microsystems for US$7.4 bn. in cash, pushing the software company into high-end computing system. "We expect this acquisition to be accretive to Oracle's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing. The business will contribute over $1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $2 billion in the second year," Oracle President Safra Catz said in a statement. The deal comes a month after IBM abandoned its bid to buy Sun. Most analysts see the deal strengthening Oracle's position against IBM. "The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," Oracle CEO Larry Ellison said. The impact of this acquisition in India, where both the companies are present for a long time, is not clear at the moment. An Oracle spokesperson said they do not comment on country-specific operations. Oracle is one of the largest multinational employers in India with more than 25,000 employees. Sun Microsystem has 1,200 people in India. Historically, Oracle has aways taken inorganic route to grow and expand its business. Enclosed exhibit details some of the largest acquisitions of Oracle.

L&T not to dilute holding in Satyam

Engineering major L&T today said it will not dilute stake in IT major Satyam, where it lost the race to Tech Mahindra for 31 per cent strategic holding, and exuded confidence that the new owner of the Hyderabad-based giant would add value for shareholders.

We are not disappointed with the outcome," a top official of the engineering giant told PTI when asked for comments on the company losing out to Tech Mahindra for acquiring Satyam.
"We expect that the new owner (the successful bidder Tech Mahindra) will increase the value of the enterprise and consequently an increase in the value of our holdings," D Morada, L&T General Manager, told PTI. Asked about the 12 per cent holding in Satyam, he said "We are not permitted to buy or sell Satyam equity for a period of six months ... This condition applies to all bidders." The official said that the company would not have gone overboard on the bidding for Satyam where Tech Mahindra emerged successful with an offer of Rs 58 a share, saying, "We bid what we thought was the fair value for the enterprise." L&T, which accumulated its holding to 12 per cent ahead of race, had offered Rs 45.90 a share. It was expected that the value of enterprise, as seen by the bidders, would vary considerably in view of the assessment that had to be made on the basis on incomplete information.

TechMahindra - Satyam deal - Why there is wide divergence in the bids

Tech Mahindra - Rs58/share - Winner
L&T - Rs45.9/share
WL - Rs20/share

The wide variation in the bid prices submitted by the three contenders for Satyam Computer Services has set off a debate on whether this could be due to the several “unknowns” with respect to Satyam (whose accounts are yet to be restated), or due to the varying priorities of the bidders themselves. The highest bid, from Tech Mahindra, was for Rs 58 a share; the second highest, from L&T, was 21 per cent lower, at Rs 45.90. The third bid, by WL Ross, was way lower at Rs 20 a share.

“Acquisition transactions are based on assumptions and there are assumptions with reference to the future, customers, employees, lawsuits… there are so many variables. And considering the past of this company, it becomes somewhat difficult to make these assumptions and make judgment calls. I guess that is the main issue,” said Mr Y.M. Deosthalee, Chief Financial Officer of L&T.

When the number of bidders is very low, it boils down to quoting the lowest price that you can get away with. Had there been more bidders, one would not have such a huge divergence, say merchant bankers. As for WL Ross and Co’s low bid, this was in line with their profile as a distress buyer globally, bidding at very low prices in the hope of a bargain buy, an investment banker remarked. However, if one were to discount WL Ross, the divergence between the bidding parties is not very huge, he said.

“This is a very unusual situation; there are different reasons for people to acquire this company,” said independent investment analyst Mr R. Balakrishnan, “The three-year lock-in period appears to have acted as a mind block for some bidders.

“WL Ross’ bid came at a lower price because even though they are a private equity fund, they would have probably liked to flip it over after some time rather than wait for three years.”

Source: BusinessLine

IBM and Sun broke off acquisition talks

International Business Machines Corp and Sun Microsystems Inc broke off talks aimed at a $7 billion acquisition, the Wall Street Journal reported on Sunday. A Sun Microsystems sign is pictured at the company's headquarters in Santa Clara, California March 18, 2009. Talks between IBM and Sun were on the brink of collapse, threatening to undermine a potential $7 billion acquisition, according to the newspaper. More updates to follow

MindTree restructures operations, eyes buyouts

MindTree is eyeing strategic buyouts in areas such as package applications and mechanical engineering services even as it restructures operations as part of growth plans to become a billion-dollar company. The Chief Executive Officer, Mr Krishnakumar Natarajan, who will assume the additional role of Managing Director from Wednesday, said the company was exploring potential targets in areas of mechanical engineering to enhance product design capabilities and in package applications, besides looking at geographies such as Europe and Japan to expand the footprint.

Allied Digital acquires En Pointe Technologies India

Allied Digital Services Ltd. a leading Indian, Enterprise IT Infrastructure Management Services (IMS) provider has acquired 100% stake in Bangalore based SAP Consulting and Support Services Provider En Pointe Technologies India Pvt. Ltd. En Pointe Technologies India Pvt. Ltd. has a pool of competent and certified SAP consultants with rich experience of multi geography, multi country SAP consulting and support services. This acquisition will further enhance Allied Digital’s Remote Infrastructure Management and Application Support Services portfolio. Allied Digital will leverage its state of the art NOC (Network Operation Centre) facility and extend proven remote support to mission-critical ERP Applications like SAP. This acquisition will help Allied Digital to complete its vision of total end to end services for remote data centre support including business applications.

Chairman & Managing Director of Allied Digital, Mr. Nitin Shah, said “The Indian IT industry has been continuously evolving & emergence of a truly end to end IT infrastructure management services player is set to make India the global hub of the world IT services network. With increasing competition & rising cost pressure, most multinational corporations will look at outsourcing their SAP/ERP Application Support needs to a comprehensive IT services provider like Allied Digital. With our globally optimized delivery model using remote services, Allied Digital is at the fore front in providing cost effective end to end IT services to customers across the globe.

FINO to raise up to $20 mn from private equity funds

Mumbai-based Financial Information Network and Operations (FINO), which provides technology solutions such as biometric smart cards for banks, plans to raise as much as $20 million (Rs102 crore) from private equity funds to increase the number of customers it serves fivefold in two years.
“We are in the process of dialogue with a few people. We are looking to raise $15-20 million and it should be finalized in the next couple of weeks,” said Rishi Gupta, chief financial officer and president (sales and marketing) of FINO. Gupta declined to reveal the identities of the likely investors. He said two parties would be infusing funds into the company, whose technology solutions have so far helped financial institutions to reach five million customers. FINO is targeting increasing the number to 25 million by 2011.

Client focus: Rishi Gupta of technology solutions provider FINO. He says that the firm is looking to deepen its base with all its customers.Private sector institutions including ICICI Bank Ltd, ICICI Lombard General Insurance Co. Ltd and IFMR Trust hold 30% of FINO. Public sector entities such as Life Insurance Corp. of India Ltd and Union Bank of India hold 30%.
The remaining 40% is owned by institutional investors such as International Finance Corp. (IFC), the private sector arm of the World Bank, and Intel Capital, the investment arm of chip maker Intel Corp.
FINO was founded in July 2006 with the aim of providing a shared pan-India technology infrastructure linking clients and financial services providers, reducing their cost of client acquisition and servicing. It aims to take financial services to under-served and unbanked populations.
“Given that this firm (FINO) has already raised $20 million in 2007 and with a credible set of investors such as IFC and Intel Capital, and also given that microfinance is doing well despite the economic downturn, I don’t see any reason about their raising funds now,” said Arun Natarajan, founder and chief executive officer, Venture Intelligence, an information and networking services provider to private equity and venture capital investors in India.
FINO currently works with 12 public and private sector banks, three insurance companies and on government schemes such as the National Rural Employment Guarantee Scheme, which promises at least 100 days of work yearly to at least one adult from each rural family.
“We are looking to deepen our base with all our customers. We are looking at cross-selling of products,” said Gupta.
FINO has developed so-called micro deposit machines in association with Ohio-based NCR Corp., which would be installed at various locations to enable small customers to save money by making regular deposits and will also help in assisted cash withdrawals.These machines, named FINO Tijori-NCR Easy Point, are movable machines that would be handled by agents such as shopkeepers.
These agents would target people such as autorickshaw drivers and others who earn daily wages to encourage them to save regularly. These machines would be located ideally near a bank branch so that opening an account and depositing money becomes easier. The agents would help customers carry out all the transactions and receive a commission of Rs2 for every transaction carried out.
The company launched a pilot project in Mumbai last month and is planning to set up at least 300 such machines at various places across the country.

Tata Tech talks to PE investors

Tata Technologies, the engineering design and technology arm of the Tata group, is looking to do a private placement and is in talks with some PE investors, said a source familiar with the Pune-based company's plans. The renewed fund raising exercise comes after the company cancelled its initial public offering proposal some months ago. The plan was to raise Rs 400-500 crore from the capital market. Details about its proposed private placement remain sketchy. Sources say the company, depending upon valuations, intends to dilute 10-12% equity stake. Tata Motors is the single largest shareholder of Tata Technologies, with holding of 82%. The design houses employees and other Tata entities hold the balance. The company serves automotive, aerospace and consumer durable manufacturers. The global economic slump has dragged valuations southwards sharply, with the impact being felt even on PE deals. The number of PE transactions being closed has dropped noticeably in the past several months. The Rs 1,100-crore Tata Technologies group, with over 3,000 employees, has development centres in the US and Germany. The private placement could be through a combination of Tata Motors selling its stake and Tata Technologies issuing fresh equity to the new investor. For the cash-starved Tata Motors, this is part of its strategy to monetise part of its investments in subsidiary companies. And for Tata Technologies, the proceeds would help reduce debt. In October 2005, Tata Technologies acquired UK-based INCAT, which in turn acquired Stuttgart, Germany-based CEDIS Mechanical Engineering in 2006. If the deal materialises, this would be one of the few closely-held Tata companies which would tap PE money. Some of the earlier PE deals include Singapore government investment arm Temasek buying into mobile operator Tata Teleservices and direct-to-home service provider Tata Sky. International Finance Corporation and IL&FS have invested in Tata Teas Amalgamated Plantations, that runs its North India plantation operations

Tanla Solutions to form JV with Spanish firm

Telecom infrastructure solutions provider Tanla said that it will form a joint venture firm with Spain-based Zed Worldwide Holdings at an investment of about Rs 63 crore.

Tanla and Zed together propose to establish a joint venture company in India," the Hyderabad-based company said in a filing to the BSE. Further, the firm has already received the approval from the Foreign Investment Promotion Board (FIPB) for the establishment of the proposed JV, Tanla Solutions said. According to Tanla, the new entity would be mainly engaged in the development and provision of traditional and next generation mobile application content and services to mobile phone users in the country. "The joint venture would commence its operations during the first quarter of financial year 2009-10," the company further said. "The JV proposes to offer new services for the mobile internet (including 3G), mobile entertainment, mobile advertising and interactive television verticals," Tanla Solutions CMD Uday Reddy said. Zed is a leading mobile entertainment services firm and has presence in 54 countries.

Hindujas close to acquiring 2 firms

Business process outsourcing company Hinduja Global Solutions (HGSL) is hunting for acquisitions in the UK and the US, despite the global recession and is close to buying two companies, a top official said.“We are very close to acquiring two companies over the next few months, which would be a strategic fit to our existing businesses. These would be contact centres with some amount of voice and data processes,” PaBOtrick David, executive vice- president, global human resources strategy, Hinduja Global Solutions, said without divulging any further details about the acquisition.In 2008, the company’s chief executive officer Partha De Sarkar had said that four companies were short-listed for acquisition and around $110 million cash from internal accruals is earmarked from the purpose. He had also said that a company with revenues of $50 million would be ideal match for HGSL.David added that cash set aside for acquisitions remains the same and the company would be looking at an optimal structure for making the acquisition.Hinduja Global Solutions, part of flagship Hinduja Group, provides outsourcing services in the areas of banking, financial services and insurance, telecom and healthcare. The company employs about 9,500 people in India, which accounts for nearly 65 per cent of its total workforce. Telecom contributes about 80 per cent of the company’s domestic business.On a query on the impact of recession, David said the company has not seen any softening in business from existing clients.

Vishal Info to raise $40 mn to finance foreign acquisition

MUMBAI: Vishal Information Technologies, a small size ITES company, plans to raise around $40 million through global depository receipts (GDR), to be listed on Luxemburg Stock Exchange.

The amount so raised would be utilized to acquire foreign companies and dollar financing would suit most for this purpose since it would avoid any impact of current currency market volatility.
The acquisition would be entirely financed by the net proceeds from the GDR issue and no further debt would be raised for this purpose.

The company has already identified a couple of target companies, which operate in data conversion and fund accounting space.

Vishal Information Technologies’ business also includes data conversion and content management. And the current acquisition plan would be in line with the existing business of the company.

The company will issue six new Indian equity shares for every GDR issued outside. If the current issue goes as per plan, the company’s paid-up equity capital would increase to around Rs 15 crore from the existing Rs 10.68 crore.

The company had an annual turnover of Rs 40 crore in FY ’08 with an operating margin of around 35%. It reported 50% year-on-year growth both in sales and net profit in recent quarters.

Currently, the company’s stock is trading at a very high price-earning multiple of around 36 compared to the valuations of other small sized IT players. The stock lost nearly 7% at the end of Tuesday’s session compared to 0.5% rise in Sensex.

Google likely to set-up venture capital arm

Google Inc, which a couple of years ago gave a tough time to venture capitalists by lapping up startups even before VCs spotted them, is now directly entering the space. The search engine is rumoured to be launching a venture investing arm titled Google Ventures. If this is indeed true, Google would be joining the likes of corporates like Cisco, Nokia, Qualcomm and Motorola, all of which have corporate venture arms.

A Reuters report speculates that Rich Miner, the head of Google's Android project, would be affiliated with Google Ventures. Miner, who joined Google in 2005 after the search giant acquired Android way back in 2005, is responsible for wireless platforms. He joined Google in 2005 when the search giant acquired Android, a company he co-founded and which is the basis of Google's new smartphone operating system.

A Google spokesman asked about Google Ventures on Thursday said, "It's a project we're working on. But we're not able to discuss the details right now."

ICRA Tech US arms buys Sapphire Intl

New Jersey based ICRA Techno Analytics Inc, a wholly owned subsidiary of ICRA Techno Analytics Limited operating from Kolkata has acquired 100 per cent stake in Sapphire International Inc, a Delaware Corporation based out of Trumbull, Connecticut, USA. Sapphire- a Microsoft gold partner is in the business of providing IT solutions to government agencies and large corporations in the US market.

ICRA, Vice- chairman and group CEO, P.K Choudhary said, "The acquisition is expected to provide strategic synergies to software applications of ICTEAS in diversified field of .net appliactions and busines aplications and solutions. The acquisition will enable ICTEAS to cater to a wider client base in USA."

ICRA's stock price surged close to 5 per cent and its last traded price was Rs 455. Sapphire uses the hybrid engagement model which involves an onsite team and low cost offshore development centres based till now in Egypt and Russia. It has an impressive clinet list including Government agencies and large corporations.

CISCO buys camera maker Pure Digital for US$600 mn

CISCO Inc. said thursday it has agreed to acquire the maker of a popular video camera, continuing the business-technology giant's push into consumer products.

Cisco will pay around $590 million plus up to $15 million in retention bonuses for Pure Digital Technologies Inc., a San Francisco-based company that makes the Flip handheld video camera. Closely held Pure Digital has raised at least $68 million from a number of venture capital firms since its inception, with backers including Sequoia Capital and Benchmark Capital.
The Flip camera has gained popularity because of its small size, ease of use, and low price tag – a standard camera costs less than $200. Cisco said Thursday that Pure Digital has sold more than two million of the devices since introducing the product in May 2007.

For Cisco, the acquisition continues the company's expansion away from its core business of selling computer-networking gear to businesses. The San Jose, Calif., company moved into home networks by acquiring LinkSys Group Inc. for $500 million in 2003, and in 2005 paid $5.3 billion for cable-box maker Scientific-Atlanta Inc. In January, Cisco unveiled a wireless home audio system that it developed.

MindTree to split biz into 5 units

Bangalore-based IT firm MindTree has decided to restructure its business into five independent business units under different CEOs as it looks to rapidly expand each of these segments. Effective April 1, the proposed restructuring will see the CEOs report to the group CEO, a company official said. The five units are IT services, product engineering services which include research and development (R&D) and outsource product development (OPD), testing, infrastructure management and technical support (IMTS), and a new area called knowledge services.

Currently, MindTree has two business units — IT services contributing 79% in revenues and R&D 21%. “The (restructuring) will position us better as it allows us to compete with both larger and smaller niche players. We want to be seen as a provider of summation of services,” said MindTree chief operating officer NS Parthasarathy. He has been appointed CEO of the testing and IMTS units. Other CEOs are S Janakiraman (product engineering services), Scott Staples (knowledge services) and Anjan Lahiri (IT services). All of them will report to Krishnakumar Natarajan who will take over as group CEO and MD. Mr Natarajan is now CEO of MindTree. Ashok Soota, chairman and MD, will be executive chairman. The acquisition of Aztecsoft in May 2008 helped the firm strengthen its testing and OPD services. With 2,000 employees in the testing segment, the current annual growth of this business is 30%.

IBM in Talks to Buy Sun Micro Systems - deal likely to happen at US$6.5 bn

International Business Machines Corp. is in talks to buy Sun Microsystems Inc. in a combination that would bolster IBM's heft on the Internet, in data storage and in government and telecommunications areas, according to people familiar with the matter.

The two companies have a common interest in that both make computer systems for corporate customers that aren't reliant on Microsoft Corp.'s Windows software or Intel Corp.'s microprocessor technologies. The two companies are also strong supporters of open-source Linux and Java software for Web application development.

It is unclear whether the negotiations will result in a transaction, but if the deal does go through, IBM is likely to pay at least $6.5 billion in cash to acquire Sun, the people said. That would translate into a premium of about 100% over Sun's closing price Tuesday of $4.97 a share on the Nasdaq Stock Market.

People familiar with the matter cautioned that while talks are under way, a transaction might not occur. Ian Colley, a spokesman for IBM, declined to comment on questions about any talks with Sun.

Sun shares have plummeted over the past year, battered by the economy as well as competitors who have outpaced it in the competitive back-office computing market.
In recent months, Sun has approached a number of large tech companies in the hopes of being acquired, say people familiar with the matter. The world's largest tech company, Hewlett-Packard, declined the offer, says a person briefed on the matter. A spokesman for Dell Inc., the world's third-largest server maker, declined to comment.

The deal would bolster IBM's position as the world's largest server maker. According to analysis firm IDC, IBM had 31.4% of the market last year; H-P was second with 29.5%, and Dell third with 11.6%. Sun ranked fourth, at 10.6%.

In recent years, the market for servers has shifted from the huge, custom-built "mainframes" that IBM dominates to vast numbers of standardized computers. By pushing standardized servers, H-P has made inroads on IBM.