Kellton Tech acquires US-based ProSoft Group for $14 mn

This acquisition will add $40 mn to the topline and $3 mn to the bottomline of Kellton

Kellton Tech Solutions Limited, a Hyderabad-based, publicly-listed IT services and solutions company, has acquired US-headquartered enterprise solutions and business integration provider ProSoft Group, for $14 million (around Rs 88 crore) in an all-cash deal.

Through this acquisition, ProSoft Group, which consists of four companies — Prosoft Technology Group Inc, Intellipeople Inc, Cyber-World Solutions Inc and Prosoft Business Solutions LLC — will add $40 million to the top line and $3 million to the bottom line of Kellton.

Kellton Tech reported revenues of Rs 130 crore in the financial year ended June 2014. It expects its revenues to touch Rs 500 crore this fiscal, and reach $100 million (Rs 630 crore) by August 2016.

Announcing the acquisition, Kellton’s eighth so far, its founder and chairman Niranjan Chintam told mediapersons here on Monday that the acquisition of ProSoft would strengthen the capabilities of Kellton to go to a much larger customer base, especially in the ecommerce space.

“ProSoft will provide us with the required bench. The acquisition will bring 375 employees of ProSoft, including 120 working out of its global delivery centre in Hyderabad, to our fold, taking the combined global headcount to over 1,000,” Chintam said.

According to Raj Gupta, chief executive officer of ProSoft Group, besides reinforcing Kellton’s expertise in WSMAC (web, social, mobile, analytics and cloud), Internet of Things and other cutting –edge technologies while amplifying its capabilities in ERP-EAI (enterprise resource planning and enterprise application integration) arena, the acquired company would also give Kellton annuity revenues through maintenance contracts that ProSoft has with its clients.

“We have maintenance contracts with 12 of our 75 active customers, with annuity revenues of $500,000 to $1 million,” Gupta said.

Chintam said Kellton Tech was actively looking at acquiring two more companies, with revenues of between $9 million and $10 million, in the US and Europe, which would bring in customers or give the depth in the area of business that Kellton Tech is in.

“We recently issued three million warrants, which will give us close to $4.5 million in equity. This will be used to fund the proposed buyouts,” he said, while declining to draw any time line for closing the proposed acquisition deals.

Kellton Tech Solutions’ scrip is currently trading at Rs 82.75 on the BSE, up 4.75%, over the previous close of Rs 79 per share.