ISG Novasoft acquires 55% stake in Irish firm

ISG Novasoft Technologies Ltd, part of $2 billion K K Birla Group, has acquired 55 per cent stake in Ireland-based GMACCM Technology Europe Ltd (GTEL), for an undisclosed amount, with a view to expanding its business in the enterprise risk management (ERM) market.

Addressing a press conference, Krishna Kumar Srinivasan, chief executive officer of ISG Novasoft, said the company had the option to scale up its equity to 81 per cent in GTEL over a period of two-three years.

The acquisition would enable ISG Novasoft to own the intellectual property rights of GTEL's risk management compass (RMC), which provides a central information repository and reporting environment for managing all types of risks.

The rationale behind the acquisition is to provide solution for risk management and adherence to regulations both in international and domestic markets.

GTEL was part of GMAC Commercial Holding Corporation.

Quoting reports of analysts, Srinivasan said that the market for ERM and compliance was estimated at $15.5 billion for 2005 and was expected to rise to $80 billion by 2009.

Will Gessner, vice-president of GTEL said that RMC was designed to offer solutions for risk management and adherence to regulations such as Sarbanes-Oxley (SOX) in the US and also the Clause 49 regulation that would come into effect from January 1, 2006, for companies listed on the Indian stock exchanges.

He also said that about 10,000 companies were listed on various Indian stock exchanges and about 600 of them apply for initial public offering, so there's a need to adhere to internal controls. "RMC will ensure executive visibility and accountability," he added.

With this acquisition, the ISG Novasoft has set a target to achieve a revenue of $20 million by the end of this fiscal. Last year, its revenue was around $ 14 million.

Srinivasan said that ISG Novasoft was aiming to be among the top three Indian companies in the emerging areas of its businesses that include risk management, application management outsourcing (AMO) and outsourced product development (OPD), in the next three years.