Software services firm Zensar Technologies Ltd has agreed to sell its India, Middle East and Australian businesses to a unit of US-based IT services company First Tek Inc.
The Mumbai-listed company said in a stock-exchange filing on Tuesday it will sell the businesses to Lorhan IT Services Pvt. Ltd for as much as Rs 26 crore ($3.6 million) in cash.
Zensar will divest its Australia and Middle East businesses via a share sale and its India business as a slump sale.
It will get Rs 8.45 crore upfront for the India business and an equal additional amount depending upon closing conditions, payment milestones and the exchange rate.
It will sell Australian unit Zensar Information Technologies Ltd for Rs 5.30 crore and the Middle East arm Zensar Software Technologies Ltd for Rs 3.79 crore, the filing stated.
By divesting these businesses, Zensar will focus and invest in its core markets of the US, Europe and South Africa, it said.
“Zensar is focused on strengthening its key verticals of hi-tech manufacturing, retail and insurance in our core markets of the US, Europe and South Africa. In First Tek Group, we found the right partner for our Australia, Middle-East and India businesses,”
Sandeep Kishore, chief executive officer and managing director of Zensar, said in the filing.
The entire divestment is contingent upon exchange rate fluctuations, closing conditions and payment milestones as agreed between the parties for the sale.
The transaction is likely to be closed by 30 April 2019.
Investment bank Equirus Capital served as the financial adviser to Zensar for this transaction.
For the financial year 2017-18, these businesses generated revenue of around Rs 76 crore in the year through March 2018, the filing added.
Hyderabad-based IT services company Lorhan is the wholly owned subsidiary of First Tek. It was founded to acquire the India, Middle East, Australia businesses of Zensar.
Founded in 2001, New Jersey-headquartered First Tek offers IT staffing, digital services such as data analytics, and development of mobile and web applications. It has offices in the US and India.
The software services provider is part of Harsh Goenka-led RPG Enterprises. The company’s consolidated revenue from operations stood at Rs 3,107.74 crore for the year through March 2018 as against Rs 3,055.59 crore in the previous year. Net profit was Rs 246.49 crore as against Rs 238.37 crore.
Zensar has global delivery centers spread across India, the UK, South Africa, and the US.
Last year, Zensar agreed to acquire US-based insurance IT company Cynosure Inc. for $33 million (Rs 214 crore).
In early 2017, it agreed to buy Keystone Logic Solutions Pvt Ltd, a Bengaluru-based digital supply chain company, for an undisclosed amount.