Sterlite Technologies buys Elitecore for Rs 180 crore

In a first-ever acquisition of a technology company in Gujarat, Vedanta Group's technology arm Sterlite Technologies Limited on Monday announced acquisition of Ahmedabad-based Elitecore Technologies Private Limited in an all cash deal worth Rs 180 crore.

The acquisition will give Sterlite forward integration with respect to software and network management for the Integrated Revenue and Customer Management (IRCM) market in India and overseas. 

While Sterlite has presence in Latin America and Europe, Elitecore has strong footing in the markets like Middle East and South-East Asia. 

"This is our first acquisition of tech company in Gujarat. The deal is expected to be closed shortly subject to completion of certain regulatory and statutory formalities. The acquisition is funded through internal accruals as we have significant cash reserves," Anand Agarwal, chief executive officer, Sterlite Technologies said in an interaction here.

"With the acquisition Sterlite will get much-needed boost for the Digital India mission and ambitious projects of Smart City development. This will enable us to offer end-to-end solutions for smart city projects, from communications infrastructure to data monetisation and revenue management," said Agarwal, adding that post acquisition, the company will be able to address around 45-50 per cent needs of the telecom industry.

Elitecore has posted revenues of Rs 147 crore and EBITDA of Rs 16 crore and is cash positive on a net debt basis. Company has remained in black for past seven years. Majority owned by First Carlyle Ventures Mauritius, whose affiliate is advised by The Carlyle Group, which had invested $ 11 million in the company to pick up 75 per cent stake in 2007 and later exited from Elitecore's subsidiary Cyberoam in 2013. "With the acquisition, Carlyle Group exited with over 15 times returns from the company," said Nikhil Jain, MD & CEO of Elitecore Technologies.

With both Sterlite and Elitecore cater to some of the largest telecom service providers globally, the acquisition will enable both companies to cross-sell their suite of offerings.

According to Jain, the IRCM sector with about $ 6 billion worth of market globally, is growing at the rate of 10-11 per cent annually.  "In India, the market size is about $ 200 million and smart city project, which will require large quantum of automation, has big potential," said Jain.

While Sterlite Technologies brings network creation and system integration expertise in sectors like telecom and power, the acquisition of Elitecore's software solutions for operations support, business support and revenue management fall in line with Sterlite's overall strategy of widening telecom portfolio of offerings to its global customers. 

Upon completion of the transaction, Elitecore Technologies is proposed to be merged into Sterlite Technologies, said Agarwal.

Sterlite was advised by Cyril Amarchand Mangaldas on legal matters, PwC on financial diligence, EY on taxation matters and KPMG on transaction structuring matters. Carlyle and Elitecore Technologies were advised by NRS Advisors and Systematix Capital on transaction structuring, J Sagar Associates on legal matters and KPMG on taxation matters.

Post the announcement of acquisition, Sterlite shares surged on the stock exchanges by close to 3 per cent to close at Rs 82.80 on the Bombay Stock Exchange (BSE).

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