Hcl Trains Sights On Foreign Software Firms
In what could be described as a trend-setting move in the domestic software industry, HCL Infotech is planning to acquire software companies abroad.
As a strategic growth plan, the company is eyeing at various options, including acquiring software companies listed overseas.
In essence, HCL Infotech will be the first Indian software company to consider buying out a foreign software company.
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Anil Chanana, group financial controller of HCL Infotech, confirmed that the company is looking at various options to increase its global reach and enlarge and service its high-end customer base. "We are looking at various growth options and acquisitions of software companies abroad is one among them," he commented.
Chanana, however, declined to disclose the names of the companies which the company is looking to acquire. "It is rather premature to say anything at this stage. We have plans to acquire firms abroad for which modalities will be worked out in due course," he said.
The software industry has remained isolated from acquisitions or mergers. There have been stray incidents of boardroom battles like the one in the case of Pentafour Software, wherein an NRI promoter was involved in sidelining other promoter groups.
The industry has suddenly attracted a lot of attention and many mid-sized companies have flourished in the last few years. Some such companies, after having attained a turnover of over Rs 40 crore, have found it difficult to grow, specially if it is an entrepreneur-driven business. "This is when the unit comes close to becoming a takeover company," said an equity analyst with a leading foreign brokerage. Chanana said that though the purpose of the acquisitions has been laid down, the target companies have not yet been identified.
He, however, ruled out acquiring any domestic software companies. "We are not looking at companies with delivery capability. Instead, we are eyeing companies which can give mileage in terms of marketing," he added. Chanana said that the size of the company is not a concern for the acquisition. "We may look at any company in the range of $100 million and above for this purpose," he said. HCL is yet to earmark any amount for the acquisition and has not commenced negotiations with any software company, Chanana pointed out.
The company also plans to raise close to $200 million by issuing American Depository Receipts (ADR). In fact, Donaldson Luffkin Jennerette -- a leading US-based investment bank -- is currently advising the company on the issue.
Chanana said the company is in no hurry to raise money through the ADR issue since the objective of the issue would be get an international exposure.