Mphasis Limited, a Bangalore-based applications and business process outsourcing (BPO) company, is acquiring Fortify Infrastructure Services Inc, an offshore remote IT operations and management (ROM) services firm in the US. Fortify has operations in India as well, and has a command center in Pune, Maharastra, it said in a statement.
VCCircle has learnt that the deal is a combination of upfront payment of $15 million by Mphasis and earnouts. The revenue of privately-held Fortify is understood to be in the region of $20 million. Avendus Capital has acted as advisor to Mphasis in the transaction.
According to IT sector observers, infrastructure management is a hotly contested area. It is clearly one of the fastest growing and highly scalable business in long-term IT services play. So, acquiring a good asset in the US corridor is important especially since there are not too many quality assets up for sale.
The shares of Mphasis were traded at Rs 650, up by Rs 16.65 or 2.63% at 12:30 pm in the BSE today.
The acquisition follows Mphasis’ last year buy of AIG Systems Solutions Pvt Ltd (AIGSS), the captive back office arm of the insurance major, American International Group (AIG), in India. Fortify offers services including data center operations, systems and application infrastructure management, security services, network monitoring and virtualization. It caters to the mid market customers globally.
Mphasis says in the statement that the acquisition will give it access to an experienced management team and a talent pool of highly experienced professionals, besides new customers. “Mphasis will now be able to provide outcome based services which go beyond technical service level agreements (SLAs). This disruptive approach will be a game changer amongst the providers of offshore ROM services,” it explains.
Ganesh Ayyar, CEO, Mphasis, said, “As mid market customers are looking for partners to solve the challenges of operating and managing their IT, we see this as a sweet spot to provide cost effective and outcome based ROM services.”
Mphasis is a private equity-backed company. Leading PE firm Baring Private Equity Partners India had invested for around 47% stake in the company, and eventually made two successive exists as well. It sold 34.73% and 2.1% stake in 2006 and 2009, respectively. Currently, Baring holds 10.4% stake in Mphasis.
Mphasis currently has a total of 35,000 head counts, and has clients across financial, healthcare, communication, transportation, consumer & retail industries, and government sectors.