iGate completes Patni acquisition

Reconstitutes Patni board; retains 4 senior executives in the executive council; iGate Patni to be the new brand identity.

Marking the biggest acquisition of the India information technology (IT) industry, Nasdaq-listed iGate on Thfursday announced the completion of Patni Computer Systems’ acquisition and revamping of the top leadership. The combined entity will be known as iGate Patni.

While Phaneesh Murthy, the iGate CEO, has been made the MD and CEO of the combined entity, he will work with an eight-member executive council. This has equal representation from the old Patni team and iGate. With this, iGate’s total holding in Patni hit 82.5 per cent.

At the board level, Narendra Patni, the founder and chairman of Patni, made way for Jai Pathak. The board will also have Shashank Singh, co-head of Apax India, and Göran Lindahl, member of the iGate board, as the new directors with existing members Vimal Bhandari and Arun Duggal continuing as independent directors.

Former CEO of Patni, Jeya Kumar, has stepped down to pave way for Murthy who will take over the position with immediate effect.

The new management of iGate said both companies will continue as listed entities in their respective exchanges while the market-facing activity will be done by a single brand to be known as iGate Patni. Murthy said he was not in favour of a family name as part of the company name, but for the time being Patni will be part of the brand as it will act as a bridge between clients.

The four members of the old iGate team, who have been retained are Sunil Chitale, Satish Joshi, Derek Kemp and Vijay Khare. iGate senior executives who are part of the new executive council of the merged entity are Sujit Sircar, Sean Narayanan, David Kruzner and Robert Massie.

Murthy said the company brought down the leadership team of the merged entity from 22 to nine people to make it more focused. “The departure of some senior executives of Patni is largely motivated by us. They have been well compensated as per their contractual obligation with the earlier Patni management. We are known as one of the best employers and always value our people. So, the retrenchment will remain confined to the senior management level,” he said.

The combined entity will now have 26,000 employees with a client base of 360. The merged entity will have a two $100 million (annual revenue generating) clients and two $50 million clients other than 36 clients who fetch a revenue of $5 million per annum.

With this, the top five clients will contribute 38 per cent of the total turnover while the top 10 customers will account for 49 per cent. “We believe there is a number of cross-selling opportunities across the 360 clients of iGate and Patni, and will focus on improving service levels depending upon our engagement with existing clients. The initial feedback of the customers is very encouraging. In the next two to three years, our goal is to become the leader by capability in two verticals (banking and financial services and insurance) and a significant player in at least three to four other verticals,” said Murthy.

In the long run, the new management favours a primary US listing but for that it will have to buy out the minority shareholders.

iGate entered into an agreement to acquire majority stake in Patni in January. The transaction marks the completion with the buyout of the principal stakeholders, Narendra Patni, Ashok Patni, Gajendra Patni and General Atlantic, and the 20 per cent mandatory tender offer to the public shareholder. On April 27, iGate concluded the open offer which was fully subscribed, giving iGate a majority stake in Patni Computer Systems of about 83 per cent.