Source:www.Hindustantimes.com

Mobile phone giant Vodafone, which is in the race for buying the 67 per cent stake in India’s fourth-biggest mobile player Hutchison Essar, while being pitted against Reliance in the $20 billion bid battle, has said that it won’t overpay.

The statement is a bid to pacify the analysts who have expressed their concern that the company might overpay to go for buying three-fourth stake in Hutch.

Although funding is not regarded as an issue for Vodafone, which is expected to pay all-cash if successful, analysts are concerned that the group might be dragged into paying a hefty premium for the buyout, reported The Times.

The mobile operator, which is facing mounting investor concern about over-exuberance in a heated race, vowed not to breach the “strict financial criteria” recently introduced by Arun its chief executive Sarin.

Its defence came as the battle for the Indian operator intensified with an alliance of four of the world’s biggest buyout groups behind Reliance, one of Vodafone’s rivals. Apax, KKR, Carlyle and Blackstone are understood to be close to joining forces to back Reliance, India’s second-largest mobile operator, in its efforts to secure Hutchison Essar.

“Any acquisition would fit with our published financial mergers and acquisition criteria,” the paper quoted a Vodafone spokesman as saying.

As the battle for Hutchison’s 67 per cent stake in the venture has hotted up and more deep-pocketed rivals such as the billionaire Hinduja brothers have entered the fray so the price for the asset has soared. Analysts now put an enterprise value on the entire group, including debt, of about $20 billion. Both Vodafone and Essar - the 33 per cent joint venture holder - have tabled formal preliminary offers.

In a bid to pacify the analysts, Sarin had recently made public the guidelines about the group’s share-price performance under him.

Richard Marwood, a fund manager at AXA, which holds just under 1 per cent of the stock, said that although it was reasonable for Vodafone to examine such opportunities, he did not want it to return to the strategic, footprint-building deals of its old days. “We do not want them to pursue it at all costs. If it cannot make the numbers stack up, then it should walk away,” he said.

Analysts at JPMorgan said preliminary calculations suggested that Vodafone’s strict mergers and acquisitions criteria “might be stretched”. Their comments followed a warning earlier in the week from State Street, a key investor in Vodafone.

Sarin, who is leading the Vodafone negotiations, had his reputation seriously damaged by a similar frenzied auction in 2004 - the 41 billion dollars AT&T Wireless battle in the US. Vodafone’s bid failed and Sarin was criticised for having a lack of communication with the City.

Source: Economictimes.indiatimes.com

 Computer Associates, the enterprise software major, has outlined a three-fold strategy for India. Besides continuing its focus on its development center at Hyderabad, CA is looking at increased partnership with IT outsourcing companies like Infosys and TCS among others. It will also not ignore the product market, though it sees a limited opportunity in this space with only a few banks and government agencies forming the market.

CEO John Swainson said, `We have 1,300 people in our development centre in India, which is almost 10% of our worldwide headcount and you’ll see that continue” CA has projected a 26% growth rate for India by 2010, making it the fastest growing markets in the Asia- Pacific region.

Though Mr Swainson admitted to having a low key presence in sales, he attributed it to a very small -base of customers in enterprise management software solutions which is largely confined to banks and government agencies. IT usage is less sophisticated in the country he said.

But the larger focus will be on partnerships in the country and building strategic relationships with IT outsourcing companies. “We’ve started building relationships with the biggest five or six Indian outsourcing companies such as TCS, Infosys and Wipro. We see this as increasingly important for our worldwide business.’’ Mr Swainson said this week at CA World being held at Las Vegas.

The discussions with the companies are likely top his agenda during his visit in October this year . Besides meeting up with the government and internal meeting, business is also on agenda, with his visits lined up to Chennai Bangalore and Delhi, Mr Swainson told ET. Though acquisitions are not ruled out in the Indian, market, the company is not looking at big ticket acquisitions in the near-term in the global market space.

Struggling to regain customer confidence after a $2.2bn accounting scandal involving former CEO, Sri Lankan native Sanjay Kumar, Mr Swainson underscored the merit of the vendor and importance of the customer. Announcing a launch of a new unified service strategy and further reassurances to customers about the transformation of the company in the wake of the scandal.

Mr Swainson highlighted the need to simplify IT solutions as they are getting more complex by the day. And he highlighted that its enterprise information management (EITM) strategy is designed to integrate the CA product line and simplify the management of IT within enterprises.”EITM unifies and simplifies the approach to managing IT,” he said. “We realised there needed to be a more holistic approach to managing IT.”

A number of initiatives were also announced at the event, including the launch of its mid-market business unit focused on companies with 500 to 5000 employees and revenue of $100m to $1bn. There are an estimated 66,000 such companies around the world.

Source: Economic Times

A joint bid by Carlyle, a private equity major and serial entrepreneur Ramesh Vangal is set to snap up Cambridge Solutions, one of the largest listed BPO companies, pipping rival bidders like EDS, Apollo and HCL to the post.  Sources affirm Carlyle is expected to buy about 42% of the promoter stake on the block for about $170-million.

This acquisition for which the PE major has joined hands with Mr. Vangal, a co-founder, as well as, the largest individual shareholder in Cambridge with an 18% stake to affect a buyout, will help unveil the Carlyle Group’s biggest investment in India till date.

The joint bid will control around 60% of the stake in the acquired firm valued at around $250-million, and which carries an enterprise valuation of $400-million.  This will be the second largest transaction in the domestic BPO state after Oak Hill and General Atlantic took a 60% stake in Genpact, with the former General Electric Company valued at $500-million.

Carlyle’s move to buy into Cambridge, with the latter having substantial revenues locked up in the insurance processing domain, could unleash synergies given its rather large exposure to the insurance sector in the US.  While, Mr Vangal could keep his equity holding intact and play a more proactive role, it unlikely he will return to the operational structure, he quit last year over differences with the existing promoters.

To be unveiled in the next few weeks after completing formalities, the promoters exiting Cambridge Solutions (formerly Scandent Solutions) include ex-McKinsey honcho Rajat Gupta, former Pepsico chairman Chris Sinclair, US-Canadian Bronfman family of Seagram fame and the Chanderia family.

Earlier this year, Lehman Brothers was mandated by the promoters to find a suitor for their holding.  It is learnt that the bulk of the 59.15% promoter holding, including that of Mr Vangal is jointly held in a Mauritius entity, which is in the process of being unbundled.  While, almost two-thirds of Cambridge’s Rs. 1,200-crore revenue comes from high-end BPO operations spread across the US, India and Europe.  Cambridge also has a strong presence in the lucrative insurance processing domain, with around 2,000 of its total 4,500-employees based in USA.

Five years ago, Mr Vangal together with Rajat Gupta and others, set up Scandent Solutions, a broad-based IT services company, and in 2004 went on to buy Cambridge Integrated Services, a global outsourcing firm and a part of the US-based Aon Corporation for $125-million.  A year later, Scandent Solutions merged with Cambridge Services to form Cambridge Solutions.

It seems mergers & acquisitions are the order of the day for Indian firms, just as a few years ago the trend took over North America.  It remains to be seen how well it works and if it helps to rake in bigger profits.

Source: www.indiaabroad.com

e4e, a business process services and software engineering outsourcing firm, already with two centres in India, now plans to set up a third centre that will have a seating capacity of 500-people, in a secondary Indian city during the 2007-08 fiscal year.

Operating in technical, financial and healthcare domains, e4e with centres in Bangalore, Chennai, US and Scotland, has most of its work bulk handled at its Indian centres, where 3,200 out of e4e’s total global 4,000 staff strength are employed.

Murrali Rangarajan, COO - e4e Inc. talking to the media confirms his firm’s expansion plans for India, as he says: “We are intent on expanding our operations in India since the firm is based on a scaleable model. The third centre will be finalised in the third quarter of the next fiscal. We are keen on setting it up close to colleges. We are considering Pondicherry, Trichy and Coimbatore as possible locations.”

Focusing on data analytics and diagnostics, this 500-seater will be scaled up to seat 1,500-people, subsequently. “The availability of talent is immense in this part of India and we intend to build on it. Besides, we are growing between 32% and 40% year-on-year, fuelling expansion,” he points out.

Presently, working out of six locations in Bangalore, e4e is in the process of consolidating its Bangalore city operations by moving into a single campus. Since the Bangalore centre’s staff works on all domains, e4e prefers operating from a single campus, as it makes it advantageous for it from a logistical point of view, says Rangarajan.

With clients mainly in the US, who account for 95% of the firm’s market, in 2006 e4e services acquired Omni Pros, a business solutions service provider based in California’s Silicon Valley for the purpose of servicing the highly lucrative technology and financial services markets.

According to IDC estimates it is a good move considering the US off-shore IT services market is set to double to an estimated $14.7-billion by 2009. “US markets will continue to drive our growth though the English-speaking areas in APAC are slowly picking up pace,” states Rangarajan, adding that e4e would continue to focus on organic growth, even while looking at the acquisition of suitable companies that come its way.