NSE-listed IT (information technology) solutions firm Coforge has signed definitive agreements to acquire a controlling stake in Bengaluru-based business process management (BPM) company SLK Global Solutions .
Coforge (previously known as NIIT Technologies) will acquire 35% of the company on April 12, 202 1 and 25% will be purchased within 23 business days, aggregating to 60% for a consideration of Rs 918.3 crore, as per a stock market disclosure. The remaining 20% will be purchased after two years.
The acquisition is expected to further strengthen Coforge’s financial services business, scale BPM operations, and expand its US footprint, the company said in a statement.
Fifth Third Bank, a significant minority shareholder in SLK Global and also its largest customer, will partially exit during the transaction.
In the first phase of transaction, Fifth Third Bank’s stake will drop to 40%, which will be further reduced to 20% after the completion of 2 years.
As part of the transaction, Fifth Third Bank will remain a significant customer of SLK Global and has committed a base volume over five years starting FY22.
“Fifth Third Bank shall be a Top 5 client of the firm and as our valued JV partner we look forward to creating a deep and mutually rewarding partnership with them in the years to come. We expect very strong business synergies to be generated through this transaction,” Sudhir Singh, chief executive officer, Coforge, said in a statement.
“Coforge’s technology and digital capabilities will be highly relevant to SLK Global’s customer base that includes several marquee names in the BFS and Insurance industries, while the latter’s capabilities will enable Coforge to compete more effectively for deals that have a major BPM/BPO operations component. SLK Global also provides Coforge with an attractive tier 3 India city delivery location,” Singh said.
The transaction is being funded by Coforge (in which Baring PE Asia owns a controlling stake) with a combination of internal accruals and external borrowings.
SLK Global reported consolidated revenue of $62 million during FY20 and is expected to report consolidated revenue of $73 million during FY21. The company employs over 7,000 people.