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News >> Technology >>
Infosys buys Citi's 23% for $115M
By Sources
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Friday, 21 April 2006, 19:30 IST
BANGALORE: Infosys Technologies today announced that it will buy the entire 23 percent stake of Citicorp International Finance Corporation (Citi) in its business process-outsourcing arm Progeon for $115.13 million, making it a wholly owned subsidiary.
The transaction is expected to be completed by July this year. This deal values Progeon at around $500 million.
For some time now, the market has been abuzz with talks of Infosys buying out Citi?s stake. On the day the Infotech major announced its annual results, company officials had said they were in talks with Citi and were expecting to close the deal in the first quarter of the current fiscal.
Under the agreement, Infosys will buy all 23 percent of Citi?s stake in Progeon on a fully diluted basis, amounting to 8.75 million shares. For the time being, Progeon will remain a wholly owned subsidiary of Infosys and will not be merged with the parent.
Infosys Company secretary V Balakrishnan said, ?We are looking at various options as there are some issues of employee stock options in Progeon, but for the time being it will be a wholly-owned subsidiary.?
For FY06, Progeon posted revenues of $85 million and Infosys provided a guidance of $125 million for FY07. Balakrishnan said the enterprise valuation of Progeon is a four-times multiple of its FY07 revenue guidance. The name of Progeon will continue for time being but the management is hoping to use the Infosys brand in the near future.
Progeon is the country?s 10th-largest third-party BPO firm as per the last Nasscom ranking for 2004-05, having over 7,000 employees with presence even in the Czech Republic and the Philippines.
It is mainly in the non-voice business, constituting around 80 percent. In fact, its decision to be a data-centric BPO meant that it took a while for it to gain traction, but in the past two years it has been posting triple-digit growth.
The company offers customer services, finance and accounting, HR outsourcing, knowledge services, procurement and order services for a range of industry verticals such as banking, capital markets, telecom, insurance and healthcare and high-tech discrete manufacturing.