Cambridge Tech to raise $25 million via FCCBs

Cambridge Technology Enterprises is planning to raise around $25 million (Rs 125 crore) through a foreign currency convertible bonds (FCCB) issue for the integration of its acquisitions and the expansion of its operations next year, provided the market stays stable, said Ramesh Reddy Y, the company's chief financial officer.

The Hyderabad-based provider of service-oriented architecture-based solutions is currently chasing five potential companies to acquire – two in India and three in the US – which have a strong Oracle technology base with geographical presence in Europe and Asia Pacific, he said.

"Our goal is to expand our services portfolio. We plan to close at least one buyout deal in this financial year and the rest in FY10. The targeted firms have revenues ranging from $3 million to $25 million (Rs 15-125 crore)," Reddy said, adding that the company was in talks with a few Indian and foreign banks and a couple of hedge funds to raise a debt of about $12 million (Rs 60 crore) to fund buyouts by the year-end.

In FY08, the company acquired five firms, including US-based CellExchange for around Rs 75 crore, Q-Soft Systems and Solutions, a Bangalore-based managed services provider, for about Rs 13 crore, ComCreation, also based in Bangalore, for Rs 14 crore and US-based Reilly and Associates for Rs 8.5 crore.

"We are in the process of closing the acquisition of US-based Protege Software Services, which is expected to add $13 million (Rs 65 crore) revenues to our run rate and over 15 customers once the consolidation is completed in a month," Reddy said.

The acquisition plans are part of the company’s strategy to focus on other regions and reach an optimal revenue break up – 60-65 per cent from the US, 15-20 per cent from Europe and the balance from Asia Pacific – as against 90 per cent from the US and a little less than 10 per cent from India now.

Cambridge Technology reported revenues of more than Rs 45 crore for the first quarter ended June 30, 2008. "We expect to maintain the same revenue run rate in the second quarter also," Reddy said.