IT services major Tech Mahindra announced acquisition of Com Tec Co IT Ltd (CTC) for €310 million (Rs 2,625 crore), including earnouts and synergy-linked payouts. This will be eight acquisition the company has made in FY22.
CTC is an IT solutions and service provider serving the insurance and financial services industries with development centres in Latvia and Belarus. For the CY2020, CTC had revenue of Euro 71.3 million (around Rs 604 crore) and for the nine months ended September 30, 2021 the company had revenue of euro 58.8 million (around Rs 498 crore).
The acquisition will enable Tech Mahindra to tap onto the potential in the insurance sector, expand its offerings to high-end digital engineering services for some of the largest insurance, re-insurance and financial services organisations globally and scale its nearshore delivery presence.
Tech Mahindra is also investing a cumulative amount of €20 million (around Rs 170 crore) for minority stake, in SWFT and Surance, for a 25 per cent ownership in each of these two InsurTech ventures funded by the same founding group as CTC.
SWFT is a SaaS-based digital customer engagement platform offering multiple functionalities for insurance sales and distribution and is designed for digital brokers, price comparison websites, and insurers wanting to directly reach their customers through digital channels. Surance is an end-to-end personal cyber insurance solution that focuses on vulnerability assessment, cyber protection, and cyber insurance coverage.
Vivek Agarwal, president, BFSI, HLS, and corporate development, Tech Mahindra, said, “The insurance industry is undergoing a significant transformation driven by new emerging business models that are powered by disruptive digital technologies. To enable this digital transformation, we are investing in strengthening our capabilities to support insurers in accelerating their transition to cloud-based platforms and provide end-to-end engineering with a strong European nearshore presence.”
Through these investments, Tech Mahindra will bolster its capabilities for accelerating the digital transformation in the insurance, reinsurance, and financial services.
The acquisition will also help Tech Mahindra scale its European presence with over 700 skilled IT professionals in contemporary technologies and processes.
Avraham Shaked, co-founder, Com Tec Co IT Ltd, said, “Since our inception over 20 years ago, we have scaled sustainably entirely through customers’ recommendations and delivered award-winning strategic solutions for them in the insurance and reinsurance industry. Becoming a part of a global entity like Tech Mahindra will give us immediate access to global scale and create a tremendous growth and development opportunity for our people and the business.”
Tech Mahindra has been making small tuck-in acquisitions in the recent past. In December the company announced the acquisition of Florida-based Activus Connect in an all cash deal worth $62 million. The latest acquisition is one of the largest in terms of deal size.