Making its second acquisition this fiscal, mid-sized information technology player Mastek on Monday said it is fully acquiring New York-headquartered Systems Task Group (STG) International.
Pays $29m for the insurance services provider
MUMBAI: Making its second acquisition this fiscal, mid-sized information technology player Mastek on Monday said it is fully acquiring New York-headquartered Systems Task Group (STG) International, a North American property and casualty insurance solutions provider, for $29 million.
Last July, it acquired another insurance-focused IT company Vector Insurance Services. Mastek has acquired STG at an Ebitda (earnings before interest, depreciation, taxes, and ammortisation) multiple of 17, against under six it itself is valued in the local bourses.
The stock fell 2% to Rs 255 in a weak Mumbai market. The company plans to close another acquisition by June. “STG is not a services company and has significant IP (intellectual property). We feel we have got a good value for the price we have paid,” R.Desikan, chief finance officer, Mastek, said. STG reported revenues of $17 million last fiscal. Mastek plans to raise the money through debt and internal accruals.
It is also raising $40 million through a combination of FCCB (foreign currency convertible bond) and ECB (external commercial borrowing) issue. The acquisition provides Mastek key US clients and entry into the $16 billion general insurance space.
Through its unit Elexir, Mastek has presence in the life insurance space and has been trying to grow its US business. The company is strong in Europe (close to 70% of revenues), particularly the UK.
“STG doesn’t have any clients outside the US. We intend to take the product to the UK, where we are strong,” Desikan said.
STG has a development centre in India, which would now be integrated with Mastek. To grow its continental Europe business, Mastek had entered into an alliance with French IT services provider Euriware. Even after over a year of the alliance formation, no major breakthrough has come so far
g_rabin@dnaindia.net
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