The Hindu Business Line : 3i Infotech hungry for more acquisitions

3i Infotech (earlier ICICI Infotech) still has a strong appetite for acquisitions, even after the three buys it has done after it publicly listed this year.

Such acquisitions could be financed through swaps also, and not necessarily through cash only, said Mr Amar Chintopanth, Chief Financial Officer, 3i Infotech.

The company also had internal accruals, he pointed out. And, to aid possible acquisitions, it recently sought an enabling resolution to issue securities or instruments of up to $50 million (Rs 230.60 crore), he said.

The acquisitions would likely be in the banking. financial fervices, insurance (BFSI) space or in certain services. They could be chosen for the product suite they offer or for the opportunity they might offer in new geographies.

3i Infotech, for which BFSI is a strategic vertical, has the option to develop its solutions or look at product suites in the market. "We feel it is better to pick up a product from the market," Mr Chintopanth said.

There are certain gaps that the company would be particularly interested in. "Trade finance (but in the banking sense) is definitely one of them. Another gap is the anti-money laundering one."

Target company

Typically a target company would be of a size one-tenth in terms of revenues with respect to 3i Infotech.

"That is where integration becomes easier and when those companies can look forward. In the companies that we have acquired, we have 75 to 80 per cent of the staff with us."

The company likes to call itself a "solutions" company eyeing a target mix of 50:50 from services and products. It is nearly there, pointed out Mr Chintopanth, with products accounting for 45 per cent of revenues.

In the product space insurance is the driver of growth today, he said. In the BFSI area as a whole the strategy is to look at all aspects of banking, and also move into the capital markets and mutual funds space.

Emerging markets

With respect to customers in BFSI, the strategy is to tap more and more the emerging markets space. Banks in emerging markets generally have two strong requirements - one is with compliance to regulations, the other being customer acquisition and service.

"East Europe, Latin America, North Africa and some countries South East Asia are going through what India went through in the nineties," said Mr Chintopanth.

In ERP too, the company has not targeted the crowded general ERP space, but has verticalised it for the process manufacturing industry. 3i Infotech is now the largest selling ERP after SAP and Oracle.

"The whole game plan for mid-cap companies (such as ours) is where you position yourself, rather than grope," said Mr Chintopanth.

With being in the solutions space, and not in the pure services space, one advantage that 3i Infotech would have is that the business model is not linear to the number of people required. Also, sales and marketing costs too have come down as a percentage of revenues.

Another growth area for the company could be the BPO space. "Not in voice, but in document processing," said Mr Chintopanth. This is one of the three things that the company does for ICICI anyway, the others being software maintenance and infrastructure maintenance.

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