Wipro, in its biggest acquisition so far, has signed an agreement
to buy London-based Capco, a global management and technology consultancy, for
$1.45 billion.
Capco provides digital, consulting and technology services
to financial institutions in the Americas, Europe, and the Asia Pacific.
The deal is an all-cash one and will be funded through
internal accruals and debt. The acquisition is subject to customary closing
conditions and regulatory approvals and is expected to close in the June
quarter.
Rishad Premji, chairman, Wipro, said: “With this deal we are
joining select service providers that bring end-to-end consultative, digital
cloud, and IT-driven solutions at scale to our customers. This deal will bring
scale to Wipro’s BFSI (banking financial services, and insurance) play,” said
Premji.
Chief Executive Officer (CEO) Thierry Delaporte said: “This
deal is a growth accelerator for Wipro. We have a complementary customer base
and it gives an immediate access to 30 BFS (banking and financial services)
clients who can significantly enhance access to industry solutions.”
Lance Levy, CEO of Capco, said: “We are excited to join our
new colleagues at Wipro. Together, we will offer bespoke transformational
end-to-end solutions, now powered by innovative technology at scale, to create
a new leading partner to the financial services industry. We look forward to
leveraging the complementary capabilities and similar cultures of both
companies.”
While analysts tracking the company said it was a bold move,
many said this might be an attempt to bolster its revenue.
“Capco is a good addition for Wipro. It strengthens Wipro’s
financial services business and adds scale to its UK and European operations.
Both have been targeted by the Wipro chief executive officer as areas to be
strengthened. It shows that under him Wipro is taking an acquisitive posture
and is likely to be adding more scale and capability through acquisition over
the next year or two,” said Peter Bendor-Samuel, chief executive officer,
Everest Group.
The company said this acquisition would make Wipro one of
the largest end-to-end global consulting, technology and transformation service
providers to the banking and financial services industry. It will add revenues
of $700 million and will see 5,000 technology and business consultants joining
Wipro.
“A consultative approach enables providers to complement the
capabilities required by customers in creating a road map for their business.
The percentage of deals coming from traditional routes is declining and hence
providers will have to engage early in helping customers across various
verticals to support their journey and this can translate into new businesses.
Wipro’s acquisition to complement consulting organisations can help it drive
better non-linear growth and become a transformational player,” said D D
Mishra, senior research director, Gartner.
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