Noida-based R Systems International is on the prowl to acquire companies in the US.
With this in mind, it plans to set up a wholly owned subsidiary there. The subsidiary will act as a special purpose investment vehicle and a holding company for its two operating arms in that country.
For setting up the holding company R Systems has lined up a corpus of Rs 10 crore (Rs 100 million), which will be increased opportunities for acquisitions come up in the US.
"The subsidiary we are planning in the US is to empower ourselves to quickly respond when opportunities for acquisitions come up in the US. The special purpose vehicle is part of our corporate strategy to look into selective acquisitions," said Rekhi Singh, CEO, R Systems, who is based in the US.
Singh expects the subsidiary to be set up within the next few months. "We are already at an advanced stage of planning," he said.
The company's plans will be funded partly through internal accruals and partly by over Rs 100 crore (Rs 1 billion) it raised through its IPO in April.
"We are bullish on the US market and opportunities provided by that market. We are looking to increase not only our technical helpdesk work but are keen to grow in our overall business. And we want to grow fast," Singh said.
The company will look to acquire companies whose operations have synergies with its core competence, which includes outsourced product development, technical support, customer care, banking and financial services, supply and healthcare.
R Systems also completed the acquisition of US-based WebConverse Inc on August 25. The company had acquired the technical suppor
t company for $10
million last month.
WebConverse is now a wholly owned subsidiary of R Systems and is one of the two subsidiaries the company currently operates in the US.
Out of the total $10.70 million to be paid for WebConverse, $1.17 million has already been paid while the the balance $9.53 million will be forwarded over a period of three years based on the performance of the company.
"The acquisition of WebConverse will help us increase our technical helpdesk work. The target is to have 200 additional agents in India through the clients of WebConverse by end-2007," Singh said.
R Systems is one of the leading providers of end-to-end services to software companies and solutions in retail finance. It aims to achieve Rs 200 crore (Rs 2 billion) revenues in the current calendar year.
For the quarter ended June 2006, the company posted net profit of Rs 5.31 crore (Rs 53.1 million) and net sales stood at Rs 27.51 crore (Rs 275.1 million).
Total income stood at Rs 28.21 crore (Rs 282.1 million). Corresponding figures for the year-ago period are not available as this is the first quarter in which the company has been listed in the Bombay Stock Exchange. Its scrip on Thursday closed at Rs 171.85 on the BSE, down Rs 5.40 from Rs 177.25 on Wednesday.
Want to discuss computer software? Join the Computer software Discussion Group