Wipro Technologies has joined the race to acquire the banking arm of Misys, a UK-based software product vendor. The Azim Premji firm, unlike Infosys or TCS, does not have a core banking product, and is looking to plug the gap. The company is under pressure to retain its slight lead over the fast-growing, Cognizant, which is threatening to displace Wipro as the third largest services player in the country this year.
An executive from Wipro, who did not want to be identified, said the firm was exploring options to stimulate growth in BFSI and as part of the process, is evaluating Misys.
Misys sells software products to banking, treasury and capital markets, has over 1,200 customers, including the world?s top 50 banks. The firm employs around 4,000 people and generated group revenues of ?782 million in 2010, a growth of 13% over the previous year. The banking division raked in revenues of ?162 million, down 14% over 2009. Earlier this month, an analyst from investment bank Jefferies & Co had commented that Misys had separated its core banking and capital markets divisions, which indicated the firm?s desire to sell the two businesses separately.
Officially, Wipro said that as a policy, the company does not comment on market rumours and speculation.
The international media on Tuesday reported that American firms Sungard, Fidelity National Information services and Fiserv were some of the frontrunners in the bidding race. Indian firms such as Infosys, TCS and HCL were also reported to be in the fray. Misys already has a strong system integration partnership with HCL. According to a report, Misys had already opened its books to a US suitor with a bid of above 450 pence a share.?Misys was trading at 413.40 pence mid-day in London on Wednesday. The company has a market value of ?1.4 billion.
A senior executive from Infosys clarified to FE on Wednesday that the firm was not interested in Misys since it already has a hugely successful core banking product, Finacle. Other executives and market analysts shared the view. ?Wipro and HCL Technologies don?t have a proprietary platform. Acquiring Misys would therefore make sense for these companies. However, for Infosys and TCS, which have their own core banking products, it would only cannibalise their products,? Sanjeev Hota of brokerage firm Sharekhan said. Other industry watchers felt that the Misys buy would make sense for Cognizant as well.
Wipro has been looking to increase its wallet share from BFSI ? the segment currently generates 27% of its overall revenues compared with peers who generate 35%-40%. In a recent interview, Soumitro Ghosh, group vice-president and global head of financial services at Wipro, told FE that the firm will be open to acquisitions of even product companies ? something it has always stayed away from. ?We will not build products. At best what we can do is to acquire a product company….Many service providers have added product portfolios in their basket. In many situations we find that a product offering does provide you with a competitive edge,? he had said.