The Hindu Business Line : HCL Tech keen on acquisition of up to $1-2 b

We have 8 areas that will move us from a lead position to a dominant position and place us in global top five in areas we operate in. — Mr Vineet Nayar

Our Bureau

New Delhi, Sept. 18 Even amidst the ongoing global financial turmoil, India’s fifth largest IT services exporter HCL Technologies said on Thursday it would be keen on large ‘transformational’ acquisition of up to $1-2 billion within the next three years, as part of its strategy for dominant positioning in the global IT market.

“Besides Intellectual Property (IP) acquisition, and geographical acquisition, all of which will be sub-$100 million range, we will also want to go for a ‘transformational acquisition’ of a large scale and size…anywhere from $100 million to as much as $1-2 billion in the markets of the US or Europe. We hope that will happen between now and 2011, and it will be a critical aspect of the dominant face of the company,” HCL Technologies’ CEO, Mr Vineet Nayar, said.

He said the valuation of the acquisition would be based on the impact it would create for HCL Technologies. “Therefore, the issue of paying too high or too less is not relevant,” he said.

The market has been rife with speculation that the company may be gearing up to make a counter bid for UK-based Axon Group and could even be eyeing Lehman’s IT business.

But HCL today refused to comment on specific companies saying, “We do not comment on speculation.”

Funding

Asked how HCL Technologies would fund a large-scale buyout in the backdrop of tight liquidity conditions prevailing in the market, Mr Nayar said the company had close to $600 million in cash. “In addition, every quarter we are generating $100 million in cash, of which we are distributing some as dividend. Also IT companies do not have debt, so there is ability to absorb a large acquisition,” he pointed out.

Mr Nayar said that for geographical acquisition, the company would look at markets such as Continental Europe and Japan. “We have eight areas that will help us move from a lead position to a dominant position, and place us in global top five in select areas that we operate in,” he said adding that the areas included engineering services, infrastructure services, enterprise application services and enterprise transformational services.