Zensar to buy US-based Akibia for $66 mn

Zensar Technologies, the information technology services arm of the RPG Group, today signed a definitive agreement to acquire US-based PSI Holdings’ infrastructure management services (IMS) unit, Akibia, for $66 million (Rs 297 crore) in an all cash deal.

The deal is to be funded partly by internal accruals and debt. Akibia reported revenues of $101.8 million, with $7.4 million in earnings before interest, taxes, depreciation, and amortization, in 2009-10. It has 325 employees in the US. The company, which caters to markets in US and western Europe, has 900 customers.

“This is a strategic acquisition for us. The company is profitable and very successful. Even during the downturn, they continued to grow. With this acquisition, we get a strong presence in the IMS space and it propels us into the top 10 contenders in this industry,” said Ganesh Natarajan, vice-chairman and managing director, Zensar.

The acquisition will also make Zensar bid for larger deals in the IMS. “We expect this will propel our deal size into the range of $5 million to $15 million. Prior to the acquisition, we were getting deals in the range of $2 million to $3 million,” said Krishna Ramaswami, vice-president, strategic services unit at Zensar.

Globally, the infrastructure management (IM) business is worth $370 billion. Of this, 75 per cent of IM roles and services can be outsourced. The worldwide remote infrastructure management (RIM) market size is $95-108 billion. The IM services segment in India is estimated to have aggregated export revenues of $4.3 billion in 2009-10.

“This acquisition also fills in several gaps for us like onsite data centre management capability, consulting, business continuity and disaster management and information security,” said Natarajan. The deal is expected to close by the end of the year.

With a target to garner at least 30 per cent of its revenue by 2013 from IMS, Zensar is looking for a few more acquisitions. “Of the $100-million that we had earmarked for acquisition, we still have a sizeable amount. We are looking at acquiring firms in the IMS space as well as in the region of Europe,” he said.

Zensar’s shares today closed 2.44 per cent higher at Rs 161.8 on the Bombay Stock Exchange.