Megasoft to buy $60mn US firm

Megasoft Limited, a transnational IP-driven technology company, is again taking the inorganic route for growth.

The company is in the process of acquiring a US-based company in the telecom space, for a consideration of between $40 million and $60 million (approximately Rs 160 crore and Rs 240 crore), this calendar year.

"We are currently in talks with three telecom technology companies in the US, which are in the final stages. We expect to wrap up the deal by this year end," GV Kumar, managing director and chief executive of Megasoft, told Business Standard.

The company had acquired Hyderabad-based VisualSoft Technologies in 2006. It plans to leverage the assets brought in by VisualSoft with the merger to fund the US acquisition.

"Depending on what strengths are added to Megasoft through this acquisition, we would look at more buyouts next year. For this, we would consider raising funds through private equity placements," he added.

Megasoft, which follows a January-to-December financial year, has set a target of Rs 1,000 crore revenues by 2009, both organically and inorganically. At present, the company is developing an integrated mobile payments platform, which is expected to be rolled out by this year end.

"With the Wimax-based technology gaining rapid acceptance globally, we are also planning to introduce Wimax products in the next 8 to 12 months," Kumar said, adding that the company has earmarked around Rs 16 crore for R&D this year, as against Rs 9 crore last year.

Ramping up the headcount to over 1,700 this year too is on the company's agenda, two-thirds of which would be in the services business. Megasoft currently employs around 1,400 professional across its Hyderabad, Chennai and US operations.