Zylog scouts for acquisitions in US

Zylog Systems Ltd, a Chennai-based IT solutions company, is scouting for acquisitions in the United States of around $100 million (around Rs 450 crore) to strengthen its presence in the region.

S P Srihari, chief financial officer, Zylog Systems Ltd, said that around eight companies were on the company's radar. These companies are operating in the high-margin segments like Banking, Financial Services and Insurance (BFSI), pharma and healthcare and SAP services. The company would finalise the blueprint by third quarter of the current fiscal, he said.

“At present, 42 per cent of our revenue is from the US, but we want to strengthen our operations in certain practices where we still need to fill need gaps,” he said. The company is planning to appoint an auditing firm with which it has carried out many of its acquisition processes, for validation and due diligence.

It may be noted that the company has received approval from its shareholders to raise around Rs 400 crore through various options including Qualified Institutions Placement (QIP), Foreign Currency Convertible Bonds (FCCB), American Depository Receipts (ADRs) and Global Depository Receipts (GDRs) in October.

The fund is mainly to serve the purpose of acquisition and the company will use the appropriate means to raise the money at the time of requirement, said P Srikanth, director, Zylog Systems. It has identified a high potential for pharma and healthcare, SAP and ERP solutions in US and is looking to some of the areas in future, he said.

The company, which acquired the Canada-based staffing firm Brainhunter in February, is currently diversifying its activities to other areas of operations. The plan is to develop the firm acquired with Canadian Dollar 35 million (around Rs 150 crore) to operate in other services offered by Zylog in other regions.

At the time of acquisition, Brainhunter was engaged in consulting and engineering services in Canada with major presence in government, telecom, BFSI, and oil and pipeline verticals. It is expected to provide Rs 900 crore revenue out of the total Rs 1,850 crore expected revenue this year, said Srihari.