Moving Towards Hardcore Banking: Tech Mahindra Acquires Swiss Based SOFGEN
Moving Towards Hardcore Banking: Tech Mahindra Acquires Swiss Based SOFGEN
Tech Mahindra on 9th December 2015, Friday has announced a definitive agreement for acquiring Switzerland based niche consulting and services company SOFGEN Holdings. The closure of this transaction will occur by March 2015. Regulatory approvals still have to be obtained for this deal.
In and Around Core Banking
With this acquisition of SOFGEN that specialises at “in and around” core banking, Tech Mahindra hopes to add USD 45 million to the revenue, according to Global Head BFSI, Tech Mahindra Ravi Vasantraj. SOFGEN has an international presence specialising in commercial, retail as well as private banking. This company has around 20 Tier-1 clients across a range of geographical locations.
SOFGEN has around 450 employees. This is an all cash deal and the value is noted at sub USD 30 million and it is about one-third of the earn outs for future revenue and margin growth. SOFGEN employees will also get absorbed into Tech Mahindra. “The transaction will get completed by this quarter and the entire revenue stream will start getting effected into our balance sheet from the following financial,” Vasantraj said. SOFGEN also has the second highest pool of Avaloq consultants in the world. It is the most prolific partner of Temenos.
Regarding the deal, C. P. Gurnani, MD & CEO, Tech Mahindra has said, "This acquisition gives us an opportunity to enhance our expertise to implement modernized core banking & transformation services capabilities. This milestone in the growth journey of Tech Mahindra will establish us as a significant player in the specialized & rapidly growing Private Banking and Wealth Management segment globally.” The Chairman of SOFGEN, Alexander Dembitz has indicated that the firm will now be able to access a whole new level of consumers and new geographies following the deal with Tech Mahindra.
Tech Mahindra Ltd, which is the fifth largest Indian software services exporter has signed a deal to acquire SOFGEN Holdings Ltd, a Geneva based consulting and services company from Switzerland. “The acquisition is also expected to help Tech Mahindra to partner with global wealth managers and private banking companies,” Tech Mahindra indicated in a statement.
First 100% Acquisition in BFSI Since Satyam Merger
This is Tech Mahindra’s first 100% acquisition in the banking, financial services and insurance segment outside of the country since the merge with Satyam Computer Services Ltd. SOFGEN used Avendus Capital as the advisor for this deal. Tech Mahindra has reported USD 90 million or 10% of its consolidated revenue of USD 900 million from the BFSI segment in the three months ending September 2014. Enhancing domain expertise is the key motive behind this acquisition, analysts feel.
Tech Mahindra is looking to reach the intended target of USD 5 billion in revenue by the year 2017. A string of acquisitions have been a means to achieve this. On 20th November, US based global telecom network services Lightbridge Communications Corp was acquired by Tech Mahindra in 2014. It also acquired BASF Business Services Holding GmbH for a sum which was not disclosed. Tech Mahindra also acquired a majority stake in FixStream Network Inc. In 2012, Hutchison Global Services was also acquired by Tech Mahindra. Tech Mahindra is currently the fifth largest company in its field. Through big ticket acquisitions, this software company is aiming for the top slot.
