IT product and services company 3i Infotech has acquired the US-based Regulus Group for $80 million (about Rs 320 crore). An additional consideration of up to $20 million (Rs 80 crore) has been provided based on an earn-out linked to performance parameters.
3i Infotech has acquired close to 25 companies since 2000. Out of these, 10 were acquired in the last financial year itself. The company in total has acquired 35 firms so far.
Regulus reported revenues of $148 million (about Rs 590 crore) for the 12 months ended December 2007. The company, headquartered in Napa, California, provides remittance services and document (bills) processing services in the US through a network of 10 centres employing close to 1,300 people.
V Srinivasan, managing director and CEO, 3i Infotech, said, "The acquisition of Regulus Group will enable 3i Infotech to strengthen its positioning in the payment processing industry. We plan to launch these processes and solutions for the Indian market shortly."
The acquisition is being funded by a loan on the company (Regulus) payable in seven years. "Our ticket size for acquisition is certainly growing as our revenues have gone up. However, since the valuations have been low in recent times, we could get a company with revenues of $150 million for this price," Srinivasan said.
He also said the company will continue to acquire smaller firms in the range of $5-10 million, but big-ticket acquisition will be slow.
"We had raised close to $100 million through the FCCB route and have cash reserves of around $63-64 million (about Rs 250 crore), which we will use for smaller acquisitions. We want to have some cash on the books," Srinivasan said.
The company will be integrating J&B Software and Regulus for targeting payment process deals in the global as well as domestic markets.
Analysts feel the strategy to grow through the inorganic route has helped the company.
"They have been able to fill up several gaps in their product offering through these acquisitions. Most importantly, all the companies that they have acquired had good margins," said an analyst tracking the firm.