IBS Software acquires US firm

IBS provides engineering solutions to the travel, transportation and logistics industries and has been keen to foray into the $40-billion global MRO market.

IBS Software chairman and CEO V K Mathews said on Thursday that the acquisition had been completed in April this year and has a cash component as well as earnout segment payable over the next three years.

 

Mathews declined to specify investments involved in the acquisition of Visaer Inc which has prominent customers like China Southern Airlines, Qantas Airways, Wood Group Gas Turbine Services and Copa Airlines among its clientele in the M&E space.

"With the Visaer acquisition, IBS will add depth to its portfolio and strive for leadership in the global airlines MRO space. We see an addressable market which comprises 3-5 per cent of the total MRO pie".

The acquisition will include the operating assets of Visaer in the US and the UK, employees, and global customer base, besides the 50-people strong company's Web-based MRO software system "Visaer".

With this, Boston-based Visaer will join an array of IBS products catering to airline operations, the other products being AvientCrew for airline crew management, AvientFleet for airline fleet management, and TopAir for integrated flight operations.

The new company will operate as IBS Technics Inc, a fully-owned subsidiary of IBS Software. Mathews said, "The earnout will correspond to 10 per cent of Visaer's topline over the next four years.

However, we expecting 30 per cent returns on Visaer's topline. The acquisition complements IBS' Airlines & Airports Operations line of business (LUB). We will accelerate Visaer's growth by utilising our offshore software centres in India, besides investing in the company further. IBS is targeting leadership in the MRO and M&E solutions spaces by 2011."

With 2,000 people on its rolls presently, IBS has over 4,500 man years spent in creating IPs and currently sees 20 per cent of topline revenues coming from airlines & airports operations, one of its six LUBs.

Airline cargo and logistics bring up another 18 per cent. Other LUBs are airlines passenger services, travel cruise and hospitality management, oil and gas logistics, and ocean transportation management, which the company launched this month out of its Rotterdam operations.

Thiruvananthapuram-based IBS had revenues of about $80 million in 2007, according to industry estimates.

Private equity investor General Atlantic invested $60 million in the company in July last year. The Visaer acquisition is IBS' fifth globally after the company acquired TopAir from EDS (Switzerland) in 2002, Avient Technologies from Honeywell in 2003, Discovery Travel Systems in 2006 and Hotel Booking Solutions Inc in March this year.

The MRO market in India alone is worth $405 million and expected to reach $1.6 billion by 2014, according to KPMG.

India presently has a fleet of 999 aircraft, including around 193 helicopters and 800 private and commercial aircraft, according to the Directorate General of Civil Aviation's (DGCA) aircraft register.
Indian carriers spend about $700 million a year on maintaining their fleet, constituting about 8 per cent of the fragmented Asian MRO market pegged at $8.7 billion. The market is expected to grow 10 per cent year-on-year, according to analyst estimates.