Private equity firm Apax Partner has acquired the software product business of Indian IT services firm 3i Infotech for about Rs 1,000 crore.
3i Infotech and Apax partner issued a joined statement that Apax has formed Azentio Software company to own 3i Infotech’s software products business. This transaction, subject to shareholder approval and relevant regulatory approvals, is expected to close in early 2021.
3i Infotech Ltd (initially established as ICICI Infotech Ltd) is an Indian IT firm, incorporated in 1993. ICICI Bank promoted 3i Infotech, but ICICI divested the majority of the shares in March 2002.
An interesting fact of this deal is that the entire company’s market capitalization (3i Infotech) stands at around Rs 908 crore; however, 3i Infotech sold its Software Product Business alone for 1000 crore.
3i Infotech provides software products, IT services, and business process outsourcing for various industries, including insurance and banking, capital markets, mutual funds, asset management, wealth management, government, manufacturing, and retail. The company intends to focus on its services business.
According to Padmanabhan Iyer, Managing Director & Global CEO, 3i Infotech, “Today’s announcement is transformative and values accretive for all stakeholders of 3i Infotech.
According to multiple reports, 3i Infotech’s software product business generates $60 million in annual revenue. According to the Mint, the company generated revenue of Rs442.98 crore for the year ending 31 March, and The net worth of the product division was Rs323.03 crore as of 31 March 2020.
3i Infotech has over 5400 employees across 12 countries, with customers located in more than 50 countries across four continents
Why 3i Infotech sold its Software Product Business
3i Infotech is currently in debt. The business’s sale will help 3i Infotech expedite repayment of all existing debt exposure of the company; ramp-up other existing business segments, including providing IT services to customers across sectors and geographies.
According to the ET report, The transaction will help pay out the Rs 800 crore debt that the company had accumulated due to misguided acquisitions that ultimately took the company into corporate debt restructuring between 2012 and 2016.