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Asia300

Indian IT companies seek edgy foreign acquisitions

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  © Reuters

MUMBAI -- Following in the footsteps of its bigger rivals, Indian engineering company Larsen & Toubro's information technology arm has major acquisition ambitions in Europe to increase its presence outside North America.

L&T Infotech is due to launch its initial public offering on July 11, and said it is chasing "new age consultancies, new age infra-management services, analytics, and industrialized internet of things" to enhance its digital and automation capabilities.

Chief Executive Sanjay Jalona expects revenue to continue coming predominantly from the U.S. and Europe in the coming four to five years with continued expansion there. "Acquisitions will bring in opportunities for growth in these markets," he said. In the financial year ending in March, North America contributed 69% of L&T Infotech's total revenue, and Europe 17.4%.

The company expects proceeds of around 12.42 billion rupees ($184.8 million) from the IPO. Jalona sees fresh opportunities in Australia, India, Japan, Singapore, South Africa, and the Middle East. "We are in the process of augmenting our teams in these markets to further explore the opportunities," the company said in a prospectus.

In 2007, the company acquired GDA Technologies, a private electronic design company in California considered one of the fastest-growing enterprises Silicon Valley; a transfer agency business unit of Citigroup in 2011; and more recently, Information Systems Research Centre, a software export division of Otis Elevator.

Like Tata Consultancy Services, Infosys, HCL Technologies, and Wipro, L&T Infotech is in a transformational phase as it moves over from labor-dependent software services to an era in which information technology systems update themselves and automatically adapt to changing business needs.

Even relatively conservative companies like Infosys have been shopping around to ensure they keep up technologically. Since 2015, Infosys has made a string of acquisitions. These include Panaya, an automated software testing service provider in Israel; energy consultancy Noah Consulting, and mobile commerce platform provider Skava, both in the U.S. Infosys has also created a $500 million fund for startups, which it is splitting equally between domestic and overseas ventures.

In March, Wipro bought HealthPlan Services, an online U.S. health insurance marketplace, for $450 million. The company said it wanted to boost its cloud-based business process services. To the same end, it last year bought into Viteos, a U.S. investment fund administration services provider.

HCL Technologies announced in April that it was buying Geometric, a Mumbai-based electronic engineering solutions company, for $200 million. The deal gives it access to Geometric's automated product life-cycle management and digital manufacturing systems.

Although Tata Consultancy Services has so far opted for organic growth, Chief Financial Officer Rajesh Gopinathan recently told an Indian reporter that the company is in the market for acquisitions of below $100 million. 

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