The Hindu Business Line : HCL Tech buy may beef up BFSI offering

HCL Technologies’ $40 million all-cash acquisition of Capital Stream in the US may help expand its offering to its financial services clientele. Capital Stream provides processing solutions to banks in the areas of credit analysis, prospecting and sales, due diligence, documentation and portfolio monitoring.

BFSI segment

HCL Tech had been using these products since 2002, which suggests that it would already have fair understanding and comfort in Capital Streams’ offerings.

There appear to be two advantages from this acquisition. One of the products of Capital Stream is a Web-based application.

This will mean easier and quicker delivery of certain services at lower cost, as manpower required for this mode of delivery would be low. Capital Stream’s solutions could also be used to tap into clients in geographies outside North America. HCL Technologies was a relatively late entrant to the BFSI segment compared with other Tier-I IT services companies.

But over the past few years, this segment has grown steadily and contributes to over 29 per cent of the company’s current revenues.

The stock market appears to have perceived this deal positively, going by a 6 per cent gain in the stock.

Significant discount

At a time when it is believed that only tier-1 and very select tier-2 companies can weather the sub-prime crisis and a US slowdown, HCL Technologies appears well placed.

That the stock trades at a significant discount to Tier-I peers also lends it additional upside potential.

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