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Indian software services firm Patni Computer Systems Ltd is evaluating two to three companies in Europe and Asia Pacific for acquisitions, its chief financial officer said on Thursday.

"There are 2-3 companies we are evaluating at this point in time. There were two companies we evaluated last quarter, did not like the fit and so passed on," Surjeet Singh told Reuters in an interview.

"M&A is a very integral part of the business. We want to fill our portfolio gap. We want to extend our coverage."

The valuation expectations from target companies had gone up because of the current buoyancy in the market conditions, he said. "Our sweet spot would be companies with revenue of $75 million to $250 million," he said.

Patni has almost $500 million in cash, which would be used to fund any buys, Singh added.

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