Infosys eyeing large acquisitions; cos with revenues of $600-700M under radar

Cash rich IT services major Infosys Ltd, which has been conservative in chasing inorganic growth unlike its rivals HCL, Wipro and Cognizant, seems to be finally shedding its strategy under the new management team led by Vishal Sikka and has some large deals under the radar. The firm is considering a few big deals in strategic areas and regions where it may acquire firms with annual revenue of $600-700 million, as per a Business Standard report citing company's chief operating officer U B Pravin Rao.

"There is no constraint (on how much the company will pay for acquisitions). At the end of the day, if it is in line with our strategy, if we think it will add value to our strategy and give us time-to-market advantage, we are pretty confident we want to do it," Rao told the newspaper.

The IT firm had a reserves of Rs 33,616 crore ($5.44 billion) in cash and cash equivalents as of September 30, 2014.

The Bangalore-headquartered company has been focusing on IP-related products, platforms and solutions (PPS) business as part of its proposed ‘Infosys 3.0’ strategy, which is mainly aimed at widening the focus and looking to move higher in the value chain.

Since its inception, the company has carried out only five acquisitions. Six years ago it had reportedly offered to buy UK-based SAP consulting company Axon Group for about Rs 3,300 crore but backed out after HCL Technologies bid a higher price.

"We take risks but finally, we can't be foolhardy. If you look at Axon, it made better sense for HCL than us at that stage. We wanted it but there was a limit on how much we wanted to pay. So beyond that, it did not make any sense for us. It was because we already had a dominant SAP practice; we still have the dominance today," Rao said.

Infosys was also eyeing large acquisitions in areas like healthcare (TriZetto, a US-based health care IT solutions, which was recently snapped by Cognizant for $2.7 billion).

Rao said the company was also looking at smaller acquisitions to buy capabilities in new technologies such as automation, analytics and big data but those deals would be of smaller scale.

He said the new strategy unveiled by chief executive Vishal Sikka earlier this month had gone down well with clients, as well as employees.

Sikka, who is the former board member of German software behemoth SAP, replaced co-founder S D Shibulal and is the first non-founder CEO of Infosys.

Shares of Infosys last changed hands at Rs 3,879.25 each, up 2.25 per cent on the BSE in a strong Mumbai market on Wednesday.

(Edited by Joby Puthuparampil Johnson)

Leave Your Comment(s)