Kolkata: ICRA Techno Analytics Ltd (ICTEAS), a wholly owned subsidiary of ICRA Ltd, on Tuesday signed an agreement here to pick up a 50.5 per cent stake for about $8 million in BPA Technologies, Inc., a California-based global business consulting and software technology services firm.
In the next two calendar years, ICTEAS will buyout remaining stake in tranches, Mr P.K. Choudhury, Vice-Chairman and group CEO of ICRA, said.
The equity valuation is based on earnings.
Mr R. Raghuttama Rao, MD of ICRA Management Consulting Services, told Business Line: “The upfront payment for BPA Tech's controlling stake was in relation to its 2011 turnover of $10 billion. Since it has very limited debt (only working capital loan), equity valuation got precedence over enterprise valuation. The earn-out principle and competitive deal valuation were behind agreed upon pricing exercise. If expected earnings are achieved by 2014, the complete buyout cost would be something around $16 million.”
BPA Tech has development centres in Chennai and Visakhapatnam, employing around 700 people. It also has a sales and customer service centre in Singapore. The deal would lend city-headquartered ICTEAS greater access to the US market.
BPA Tech was promoted by two-India born Americans in 2004 with equity support (of around 15 per cent) by a private equity firm Tradewind Capital Group.
Ms Vijji Suryadevara, promoter and CEO of BPA Tech, said that in terms of complementarities in domain competence, the deal was a strategic fit.
Mr Prateep Guha, MD of ICTEAS, said the acquisition would synergise BPA's strength in enterprise content management and ICTEAS' focus area of business intelligence and analytics. Both firms have Fortune (10 and 500) companies on their existing client lists.
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