Blue Star Infotech and Infogain Inc. Join Forces
Kemmannu News Network, 30-09-2015 18:08:37
Blue Star Infotech and Infogain Inc. Join Forces with a Vision to Become the Next Digital Transformation Global Technology Leader
MUMBAI, INDIA — SEPTEMBER 29, 2015 — Blue Star Infotech Limited (BSIL) has announced that its IT business is to be acquired by Infogain Inc., a ChrysCapital portfolio company. The aggregate consideration for the IT business of BSIL and its subsidiaries in USA, UK and Singapore under the transaction will be Rs 180.80 crores, payable upon completion of the sale. In addition, BSIL would retain a real estate undertaking, a certain amount of cash and tax receivables. The fair value of these net assets to be retained by BSIL is expected to be around Rs 96.7 crores. The sale transaction is subject to the approval of shareholders of BSIL.
In the last five years, the landscape of the IT industry has evolved significantly. The technology and business focus has shifted to specialised verticals and delivery options that require large scale and a global footprint. While BSIL has achieved significant growth, doubling its revenue between 2011 and 2015, it now needs enhanced access to technology and global markets and a significant capital infusion to invest in building new age differentiated solutions and remain competitive in the ever-evolving technology landscape.
With this agenda, the management of BSIL engaged, a leading merchant banker, to evaluate whether to raise capital and execute a long-term growth strategy or to align business interests with a peer in the industry and create differentiation and scale in the immediate term. After considering a number of options, the BSIL Board has approved the sale of its IT Business to Infogain. ChrysCapital, a leading Private Equity firm, which recently acquired a majority interest in Infogain, would support them financially for this transaction and provide the combined entity the necessary global reach and growth capital going forward.
The combined entity will have revenue of over $150 million, close to 4000 employees and multiple global delivery centers. The combined platform will provide customers with a leading digital transformation platform with capabilities in Cloud, Mobility, SAP, Analytics, Product Engineering and Test Automation from locations in US, UK, Middle East, Singapore, Malaysia and India. Blue Star Infotech is already a leading player in Travel/Hospitality, Logistics, High-Tech and HealthCare. Through Infogain, the combined operation will add capabilities in Retail, Insurance, further strengthening its Healthcare and High-Tech capabilities.It will also obtain outstanding Oracle capabilities for point-of-sale systems, merchandising systems, CRM systems, Knowledge Management systems, ERP and Call Center technology capabilities.
Commenting on the transaction, Suneel M. Advani, Chairman, said “This proposed transaction will align BSIL’s Information Technology business with a larger peer thereby strengthening position in the industry. This would enhance current service offerings for our customers as well as create growth opportunities for our employees.”
Sanjay Kukreja, Managing Director at ChrysCapital said, “BSIL’s IT assets are an ideal fit for Infogain with the vision of creating a leading new age digital services platform with combined capabilities in Cloud, Mobility, SAP, Analytics and Product Engineering. We expect the combined company to grow to half a billion dollars, through organic and inorganic growth, within the next five years.”
Kapil Nanda, President and Chief Executive officer of Infogain adds, “Blue Star Infotech has achieved outstanding success over recent years and I look forward to working with its high performance leadership and team to deliver even greater value to clients. I am extremely excited to welcome them to the growing Infogain team.”
“The IT industry is evolving as never before, and we are excited by the opportunity to offer our clients and employees increased scale of operations as well as broader capabilities including next generation technologies”, says Sunil Bhatia, CEO & MD of Blue Star Infotech.
Avendus Capital Private Limited is serving as the financial advisor, Talwar Thakore & Associates as the legal counsel and KPMG as tax advisors to BSIL.
Following the completion of BSIL’s IT business sale, it is proposed to merge BSIL with Blue Star with effect from April 1, 2015 under the provisions of section 391-394 of the Companies Act 1956 through a court approved scheme of amalgamation. A separate joint communication from Blue Star and BSIL provides more details on this matter.
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