Indian IT services company R Systems International Ltd has struck an acquisition just weeks after private equity giant Blackstone's attempt to take it private failed.
Mumbai-listed R Systems said it has agreed to acquire Pune-based Velotio Technologies Pvt. Ltd for an upfront consideration of up to Rs 278.8 crore ($33.8 million) subject to post-closing adjustments.
R Systems said that Velotio’s existing shareholders also hold optionally convertible redeemable preference shares and that it may later acquire these securities.
The development comes on the heels of Blackstone's failed bid to buy additional shares of R Systems from its public shareholders to take the company private.
The private equity firm had said in November it would buy almost 52% of R Systems for Rs 1,497.7 crore ($177 million then). It needed to buy an additional stake of about 38% to raise its stake to 90% for the delisting proposal to work. However, the PE firm managed to get offers for only 11.45% stake from public shareholders.
Pune-based Velotio is a product engineering and digital solutions provider. It has a team of over 300 engineers. Its revenue jumped to Rs 127.4 crore for 2022-23 from Rs 82.8 crore in 2021-22 and Rs 44 crore the year before. With this acquisition, Velotio co-founders Kalpak Shah and Chirag Jog, along with the rest of their team, will join R Systems.
"Velotio’s deep engineering capabilities within its focus verticals neatly complement our vertical presence and deepen our delivery capabilities in areas like Cloud, DevOps, Data Engineering, and Generative AI," said Nitesh Bansal, MD and CEO at R Systems.
R Systems provides technology, artificial intelligence, analytics and knowledge services. It helps customers in their digital transformation with offerings such as product engineering, cloud enablement, quality assurance testing and digital platforms and solutions.
The firm went public in 2006. It offers services across sectors such as telecom, technology, healthcare and life science, finance and insurance, and retail and e-commerce. It has about 20 development and service centres to serve customers in North America, Europe and the Far East. Over three-fourths of its business is derived from North America and Europe.
US-based M&A advisory firm Technology Holdings acted as the financial advisor to Velotio on the transaction.
