India’s second largest IT services company, the Vishal Sikka-led Infosys has valued the latest acquisition of Panaya six times its revenue with an enterprise valuation of $200 million. This also gives the IT major a base in Israel and gets around 150 employees.
During an investor call on the acquisition on Monday night, Infosys CFO Rajiv Bansal said, Panaya has been valued six times its revenue and expects it to be EPS accretive in next 12-18 months.
Infosys CEO Vishal Sikka said, “We want to acquire companies with unique technologies.” He added that the company was happy with valuation and it has been validated by a independent group of bankers. “We don’t believe that we overpaid at all,” he remarked.
Panaya, founded in 2006 with investments from Benchmark Capital, Hasso Plattner Venture and Battery Ventures has over 400 active customer accounts with some global marquee names like GE, Apple, Coke, Johnson & Johnson.
Panaya derives 40% of its revenues from the US with an equal share from the EMEA market.
Panaya is expected to make major contribution to Infosys’ application service line in particular on the testing side of the business by automating many of processes. It is likely that IT major will be extending this expertise to its other service lines like BPO and infrastructure management.
Despite certain commonality in clients, Infosys does not see any significant overlap or any cannibalisation of services.
Sikka said that the fundamental focus on Infosys will be on organic growth and it would acquire only to bring in new capability. “We are constantly on look out for new age companies,” he added.
The Panaya acquisition is expected to close before March 31, 2015 and Infosys is likely to disclose more details on this transaction in terms of cash position and profitability.
The last major acquisition of Infosys was Lodestone Management Consultants in 2012 for around $350 million which was an valuation of about two times the revenue.