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It is no secret that Phaneesh Murthy, CEO of iGATE, has for sometime now wanted to take his company into the big league - a $1-billion annual revenue was the benchmark for that goal.
On earlier occasions he has revealed, to Business Line , his ambition to make iGATE a 25,000-employee company, through acquisitions. The announcement today on his company buying majority stake in Patni Computers marks a milestone, what with the latter's annual revenues of $689 million and iGATE's $252 million.
Stressing that customers and employees of an IT services company, such as Patni Computers, are key to its success, Mr Murthy sought to arrest employee fears on future uncertainty that is typical in such transactions. He did admit that cultural issues would play a big role in integrating manpower. “We hope to keep all the employees,” he said.
branding
Deciding on the branding of the two companies was also an issue, said Mr Murthy, who pointed out that iGATE has a “challenger” brand. He, however, said that both the brands would be retained in the short- and middle-term.
Mr Murthy said that one of the reasons why he preferred Patni as an acquisition target was because of the synergies involved. “iGATE is strong in the BFSI sector and has teams in South India, while Patni, which has clients in areas like insurance, has a strong presence in North and West India.”
Regarding customers, Mr Murthy said that the combined entity will have two clients in the $100 million-plus category, two in the $50 million-plus category, and 36 in the $5 million-plus category.
In the last three to four years, rumours of the Patni brothers (Narendra K Patni, Gajendra K Patni and Ashok K Patni) and General Atlantic (all together holding 63 per stake) selling out have surfaced time and again. Players such as Larsen & Toubro, IBM, NTT and Fujitsu have been linked as potential suitors from time to time.
However, this time around the race had narrowed down to two bidders: a consortium of private equity funds Carlyle and Advent, along with former Wipro Vice-Chairman Mr Vivek Paul; and the final winner iGATE and Apax Partners.
Patni's stocks closed at Rs 463.85, up by 0.82 per cent. iGATE shares on NASDAQ were down 1.54 per cent at $19.16.
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