Infy looks for acquisition in utilities, healthcare

Infosys Technologies, India’s second largest IT exporter, is planning to acquire ‘strategic assets’ overseas. However, it does not intend to go in for big bang acquisitions like Axon — the bid for which fell through owing to a competing bid by another Indian IT outsourcing services provider HCL Technologies.

The Bangalore-headquartered company is believed to be evaluating two-three companies which are in the revenue bracket of $100-$200 million to eliminate some gaps that exist in its services offerings and increase focus on certain verticals which have been least affected in the midst of the economic slowdown. It is reliably learnt that the company is looking at healthcare and energy, and utilities as the two major areas for possible acquisitions.

So far, Infosys has made two successful acquisitions including the acquisition of Australian firm Expert Information Technologies for close to $23 million in 2003, and Philips’ global BPO operations in 2007. At the end of the third quarter this fiscal, Infosys had a cash reserve of about Rs 8,463 crore.

“Whether there is a slowdown or not, it does not matter to us for our inorganic pursuits. We are evaluating strategic assets to fill in some gaps in our service offerings; to expand our presence in certain geographies and to increase our focus on certain verticals where the company has limited presence now. However, we would like to have smaller acquisitions instead of larger ones,” V Balakrishnan, CFO of Infosys Technologies told Business Standard.

For companies like Infosys, said S (Kris) Gopalakrishnan, CEO and MD, Infosys Technologies, “There are several sectors where the company has a small presence - such as the public sector, energy, utility among others which are opportunities for us. In addition, we are looking at services such as consulting, infrastructure management and BPO which still contribute a small 7-8 per cent of our overall revenue and have potential for more opportunities.”

It is learnt that Infosys is evaluating a few opportunities in France, Germany and Japan as it is finding it difficulty to organically grow in these markets. Last year, Infosys had been unsuccessful in its $753.1 million (Rs 3,300 crore) bid for UK-based SAP consulting firm Axon as the company decided to back out from the deal when HCL Technologies made a competing bid bettering Infosys’ 600 pence per share offer.