Hewlett-Packard (HP)-owned information technology-business process outsourcing (IT-BPO) company MphasiS is looking at acquisitions in the banking and capital markets sectors in the range of $100-300 million. Sitting on a $375-million cashpile, the company is also scouting for inorganic growth in the emerging technologies space – in payments and platforms that can be enabled to offer services.
“We are looking for small and mid-sized companies in our two focus areas of banking and capital markets along with insurance. The small buys could be less than $100 million, while the mid-sized buys less than $300 million,” said MphasiS CEO Ganesh Ayyar, without naming the geographies where the acquisitions could take place.
The mid-tier IT firm had acquired Wyde Corporation, a US-based insurance software services provider in an all cash deal in 2011. It was the company’s second acquisition in the insurance industry vertical, after AIGSS (AIG Software Systems), the AIG captive centre in India in 2009.
MphasiS is halfway through its transformation after HP acquired it, and besides inorganic growth, it is also considering a buyback that maybe announced in March, when the company announces its first quarter results.
The company had earlier stated that because it has made two acquisitions in insurance, the focus would now be on banking and capital market, and also on certain emerging technologies. The two segments were created as part of its new organisational structure in 2010. While banking and capital markets is a 1,310-crore vertical for MphasiS, insurance is a R507-crore sector.
At present, HP as a partner contributes 52% to MphasiS’s revenues, down from 62% last year, while as a customer, the share is stable at 10%. MphasiS’s direct non-HP revenues have increased to 38% in 2011 from 28% in 2010.
“We are looking at a combination of applications and BPO for services to grow organically and hence will hire on demand and not to increase capacity,” Ayyar added. BPO is 16% of the company’s business and in 2011, the company’s revenue stood at R5,098 crore.