Noida-based IT solutions provider Coforge on Monday picked up a controlling stake in SLK Global Solutions, a business process transformation services provider primarily to the financial services industry, for a reported enterprise value of USD 195 million.
Noida-based IT solutions provider Coforge on Monday picked up a controlling stake in SLK Global Solutions, a business process transformation services provider primarily to the financial services industry, for a reported enterprise value of USD 195 million. The deal will further strengthen the financial services vertical of Coforge, scale up its BPM operations and expand its US footprint, the company said in a statement, which did not quantify the deal value. However, sources told PTI that the enterprise value of the deal is around USD 195 million.
Though based in Bengaluru, SLK Global has most of clients in the US banking and insurance sectors and has deep domain expertise in the banking and insurance businesses of North America. It services clients like Fifth Third Bank of the US, which in addition to being the largest customer is also a large shareholder with well over 40 per cent stake of SLK. It has offices in Texas in the US and the Philippines. Coforge will initially acquire 60 per cent of SLK by completely buying out its founders and some stake of Fifth Third Bank’s, post which its stake will come down to 40 per cent. Coforge will acquire an additional 20 per cent stake from Fifth Third Bank after two years.
SLK Global had USD 62 million revenue in FY20 and this is expected to touch USD 73 million in FY21. A profitable company, the deal should be margin accretive to Coforge, the statement said. As part of the transaction, Fifth Third Bank has committed to remain a significant customer of SLK Global and has also committed a base volume over five years starting this fiscal. “We are very excited to welcome SLK Global and its over 7,000 employees into our family. Fifth Third Bank shall be among top 5 clients of the firm and as our JV partner we look forward to creating a mutually rewarding partnership with them in the years to come,” Sudhir Singh, chief executive of Coforge, said.
Expecting very strong business synergies to be generated through this transaction, Singh said this differentiated, high growth, margin accretive business further strengthens the company’s position in the North American financial services industry and our BPM business. The transaction is being funded by Coforge with a combination of internal accruals and external borrowings, the statement said, adding post-closing, the key management personnel, excluding the founder-promoter, will stay on.
Avendus Capital was the investment banker to all SLK, and KPMG and J Sagar Associates for Coforge. Coforge leverages AI, cloud and insight-driven technologies to transform clients across financial services and travel industries and employs over 12,000 as process consultants engineers, and designers. SLK Global Solutions is a business process transformation enterprise, offering BPM and digital solutions to financial services players and its clients include the many of the top 25 American banks, top 10 insurance intermediaries and many Fortune 500 companies. It employs over 7,000 across its delivery centres in India, North America and the Philippines.
The Cincinnati, Ohio-based Fifth Third Bank is a federally chartered lender with USD 205 billion in assets as of December 2020 and had 1,134 branches and 2,397 ATMs. Coforge closed down 1.5 per cent at Rs 3,120 on the BSE whose benchmark Sensex plunged 3.44 per cent on the pandemic worries.