VCCircle

Subhash Menon thinks big. His company Subex Systems is a mid-market IT company with roughly $40 million in revenues. But his acquisition price can get as big as three times of his own revenues. In the largest overseas acquisition by an Indian software company, Menon's Subex has acquired UK-based Azure Solutions for $140 million (Rs 620 crore). It's a stock-cum-cash deal (97 per cent stock and 3 per cent cash).

Subex is a telecom software and security solutions company. With the acquisition, Bangalore-based Subex will have 24 per cent share of the market globally.

In the merged entity, the Azure management will hold 12 per cent, while its three main investors, New Venture Partners, Doughty Hanson Technology Partners and Intel Capital, will hold around 22.5 per cent collectively. Menon will hold 12 per cent, down from the current 18.57 per cent. It will be renamed Subex Azure Ltd.

Subex closed 2005-06 with a top line on product revenues of Rs 116 crore (total, including services, revenue Rs 181 crore) with profits of Rs 39 crore. Azure is a $31 million firm. [Via Business Standard]

ICICI Venture Funds Management has acquired 6.38 per cent in Geometric Software Solutions for Rs 45.4 crore ($10 million). The company will issue 3.86 million equity shares at Rs 117.66, at a face value Rs 2 per share to ICICI Venture. Geometric was advised by Enam Financial on this transaction.

Geometric plans to utilise the proceeds to fund its inorganic growth plans, and it is actively scouting for acquisitions in the engineering services space, a Geometric Software release said. Meanwhile, in a statement to the Bombay Stock Exchange, the company said that it was "prospecting the acquisition of an engineering services business". It has already signed a term sheet, and the company will fund this transaction through a mix of debt and equity. [Via Business Standard]

Chennai-based IT services company Helios & Matheson has acquired 43 per cent stake equity in The A Consulting Team, Inc. (TACT), a Nasdaq-listed IT and BPO company, for $8.7 million or $8.54 per share plus an earn-out. TACT is prmoted by its founder and CEO, Shmuel BenTov, who will remain as TACT's president and CEO pursuant to his employment agreement dated as of December 1, 2005. [Via Release]

Finally, Mphasis, a leading applications and business process outsourcing (BPO) services company based in Bangalore, is selling out to EDS. The multinational IT company has announced a conditional open offer to acquire a 42 per cent stake in Mphasis for some $380 million. The offer is at Rs 204.5 (approximately $4.58) a share in cash. This represents an approximate 30-percent premium to the 26-week average price of Mphasis.

The offer will be contingent upon EDS acquiring 83 million shares, representing approximately 52 percent of current shares outstanding. If at least 83 million shares are not tendered in the offer, EDS will not accept any shares tendered . At current exchange rates, total purchase price for the 83 million shares is approximately $380 million. EDS expects this transaction to be completed by early third quarter. “This offer is complementary to our overall strategy to enhance EDS' presence and capabilities in India,” said Mike Jordan, EDS chairman and chief executive officer. Mphasis currently has more than 12,000 employees, including about 11,000 in India. Mphasis serves clients in multiple industries, including financial services, transportation, technology and healthcare. [Via Press release]

MphasiS chairman Jerry Rao to head EDS’ global fin services practice

The Economic Times reports that Jerry Rao erry Rao is expected to head the global financial services practice of EDS. Currently, Jean-Louis Bravard leads EDS’ global financial services. The rationale behind MphasiS’ acquisition is that EDS wants to ramp up its financial services practice to compete with IBM Global Services. EDS has been working on strengthening this practice for the past three years.

Have been in talks with EDS: Baring Pvt Equity

In an interview to Moneycontrol.com, Rahul Bhasin, MD, Baring Private Equity, which holds 34.9 per cent in Mphasis, said that the fund seriously explore the open offer. Their earlier efforts to sell out (based on an auction process) never materialised. I believe they got better offer prices earlier, and the current price of Rs 204.5 seems to be less than what was offered by Temasek or Hinduja TMT in May 2005. (Read this article for more.)

There are two European IT services firms looking at acquisitions in India. Reuters reports that Capgemini, Europe's largest computer consultancy, is talking to several smaller Indian IT players for an acquisition. "India is very exciting. IT developments are national pride. I think that we are doing extremely well (there) but a consolidation would help us," Paul Hermelin, its Chief Executive, told the Reuters Global Technology, Media and Telecoms Summit in Paris. "We are talking with several Indian companies," he added.

Hermelin said that potential acquisition targets in India would mainly include IT services companies. But Capgemini could also buy business process outsourcing (BPO) companies, though not those which only had call centre operations. "We will look at non-voice BPOs," he said. They will basically look at tier two companies, and not the top tier ones like Infosys, Wipro and TCS (they are not for sale., anyway). Hermelin's targets could be smaller players which did not quite enjoy the same stock market multiples as Infosys and Wipro. (I-bankers, any ideas?).

In another related story, Cagemini's smaller rival, Atos Origin, said it was also looking to make acquisitions in India and planned to increase its staff there to 2,500 by the end of 2006 from 1,500 now.

Bernard Bourigeaud said, "I'm in discussions with some firms," he said. He hoped to clinch a deal "as quickly as we can". Bourigeaud said the companies he was looking at were in information technology, but that he was not discounting the possibility of buying an outsourcing firm.

However, Hermelin added that none of these companies was under pressure to do deals., so the conversation can take long.

SemIndia is setting up India's first semiconductor fabrication plant in the private sector in Hyderabad at a cost of $3 billion (Rs 13,500 crore). SemIndia is floated by a consortium of non-resident Indians led by Dr Vinod K. Agarwal. The chipmaker Advanced Micronic Devices will be providing technical support for SemIndia's proposed fab project. But how does it plan to fund the investment?

India Semiconductor Association (ISA) has sought a sum of Rs 10,000 crore from the government to invest in different semiconductor projects, including SemIndia. SemIndia, however, on its part is seeking a combination of private equity and debt to fund the project.

Click here for a detailed story in The Hindu Business Line.

This was reported earlier, but here is the official announcement and the actual figure of investment. SoftBank Asia Infrastructure Fund (SAIF) Partners, a leading Hong Kong-based private equity fund, announced that it has invested $22.5 million in Cybernet Software Systems (CSS).

This is a reader's comment on NowPos. I am posting it here, since it adds another perspective to the issue. Thanks Chandan for the comment.

Similar to Teleflip in North America, in India we have a lot of similar service providers like sms.ac and many more which at one point of time gave it free. [airtelno]@airtelkk.com still works for me to send sms to any airtel in india by email from any account.

Checked out NowPos. Googling 'email with voice' throws up 131 million results, and I even checked out a couple of sites on that. So, the difference must lie in technology and positioning, and maybe, in its being free. Most of the other softwares send the file along with the email by converting it to a popular audio format. NowPos, I assume, saves sound-files on its own servers, and just sends the links, which is easier to access and play at any time without increasing mail-box size.

Packaging apart, I found no problems in recording my voice and sending it across. It was quite fast at that. However, it plays ads before conveying the actual message, which might confuse the person if the product is not that popular. Also, all mails went automatically to 'spam' which I suspect was due to no text content.

Positioning it at BPO jobs might be a good idea. But I believe companies will ask for a whole assessment model rather than just voice recording. Assessment companies right now have their own software at examination centers and record standard replies to some standard questions, based on which candidates are assessed. This software will make the installation redundant. However the assessment companies are capable enough to have online recording feature integrated into their software.

Can't say about matrimonials. That would assume that the voice of a suitor becomes an important part in assessing him as a bride/groom.

What interests me most is when they say, they make "the 'sound files' on NowPos the smallest in size in the Internet space". That could have profound applications in its own sense. All these incredibly big song files that we have on our computers could be converted into their format. The whole arena of music sites like 'yahoo music', internet radio sites like BBC, CNN which depend so much on voice streaming could be revolutionized if the site really has been able to overcome the problems it says it has addressed.

I would like to know more about their technology.

By Chandan

I have been invited to participate in the beta testing of an innovative voice email application from a company in Hyderabad. The company is called NowPos (short for Now Possible) and has developed a voice email (vMail) application.

What exactly is vMail? According to the company, it's a "web-based e-mail service that brings in a new paradigm in e-mailing - of using voice - recorded, encrypted, delivered and retrieved in a unique way, making the 'sound files' on NowPos the smallest in size in the Internet space."

Basically, you can send a voice mail from your NowPos id to any other email account like Yahoo! or Gmail. I am yet to test it (I haven't attached my headstet to the comp), so I can't vouch for it as of now. (It says I can refer 25 50 friends, if any of you are interested, let me know)

Apparently, NowPos has been working on this for the last one year or so. It has filed for patent protection of its technology. This is said to be having applications not only for friendly chats but also in areas like recruitment, matrimonials etc.

Ayyappa Nagubandi, Leader, NowPos Online Services, told CNBC channel a few months ago, "This can be used in job portals...matrimonials.. Most recruitment in India happens for voice BPOs. People can record their profiles online. The

recruitment cycles can be cut short. The same thing can happen in

matrimonials also..."

UPDATE I

It's an interesting innovation from India. It's incubated by TrulyIntelligent Technologies Pvt Ltd in Hyderabad, and is now its fully-owned subsidiary. But I am not very happy with the design, architecture etc...I am sure they need some help to make it world class...I am also not very sure about the need for such a service...I would prefer a service where your cell phone or fixed phone voice message could be sent as a voice message to an email. Michael Arrington talks about a company called Teleflip which allows sending a text message to a mobile phone for free. It's not a new concept but is useful.

In the US, startups are being built to be sold to Google, Yahoo or Microsoft (GYM). In India, it's Cisco Systems playing that role - which is on a prowl to acquire small and medium companies with a strategic fit. The Economic Times reports that Cisco Systems is looking to acquire companies operating in the small-medium business (SMB) segments in India.

“We are open to acquiring companies in the SMB segment provided their area of operations gels with the SMB segment Cisco is targeting,” said Suprabhat Chatterjee, Cisco's national business development manager, enterprise, India & Saarc. “The target company’s areas of operations will also have to match our strategies for the segment. Companies operating in specialised fields can also be possible take-over candidates,” he added.

Globally, Cisco has firmed up a $2 billion investment budget for its SMB initiative, a portion of which will be deployed in India. Cisco, alongwith Macromedia, had picked up a strategic stake in Indiagames, a mobile-games publisher, early this year. (Via The Economic Times)