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Tech Mahindra Ltd will acquire UK-based Target Group in a bid to strengthen its BFSI portfolio. The transaction is expected to close in the second quarter of FY17, subject to the receipt of regulatory approvals. The deal size was not disclosed.
The acquisition catapults Tech Mahindra to one of the top 3 processors in UK financial services for certain complex lending and investment product categories. It also strengthens Tech Mahindra’s European presence and adds several new clients
“The acquisition strengthens Tech Mahindra’s BFSI practice by access to IP and a platform which helps automate end-to-end processes in the lending, investments and insurance market. The acquisition will enhance Tech Mahindra’s capabilities and allow Tech Mahindra to capture a larger share of the GBP 45-60 billion annual spend by UK BFSI companies on software and services. Tech Mahindra intends to leverage its global footprint and enhance the platform to service other markets,” the company said in a statement.
Headquartered in the UK, Target Group has 740 employees and a client franchise, including leading financial institutions such as Goldman Sachs, Morgan Stanley and Credit Suisse. Target Group had revenues of GBP 51 Million in 2015.
The acquisition is in line with Tech Mahindra's strategy of expanding its Fintech capabilities and adding IP and platforms to drive non linearity and play aggressively in the BFSI sector. Target Group’s proprietary platform automates complex and critical processing, servicing and administration of loans, investments and insurance.
As part of the agreement, Tech Mahindra has agreed to purchase 100 per cent of the shares of Target Group. Target Group will remain a standalone entity retaining its existing brand and the entire management team.
Target Group provides BPaaS offerings in the areas of lending and investment products servicing to its clients, on variable pricing models.
Significant synergies
Target Group’s capabilities are highly complementary to Tech Mahindra’s strong BFSI IT services capabilities and significantly enhance its Fintech offerings. The acquisition will help Tech Mahindra to expand its offerings in the lending, savings and investment and insurance sectors. There is also a significant opportunity to cross-sell Tech Mahindra/ Target offerings in each other’s client base and extend the platform to other markets.
CP Gurnani, MD & CEO, Tech Mahindra, said “Target Group’s strong IP and disruptive proprietary platform significantly enhances our Fintech offerings. This acquisition will make us a formidable player in the UK BFSI market with over 50 major financial institutions as clients. The acquisition lies at the confluence of several of our strategic priorities – add IP, double BFSI revenue and expand European footprint.”
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