New Delhi: HCL Axon, a unit of HCL Technologies, will pay up to $18.5 million to buy the the SAP division of South Africa’s UCS Group, an official said on Friday.

HCL Axon, which helps firms business management software from Germany’s SAP AG, said it would make an initial payment of $7.7 million to USC, and other payments over two years based on the growth of the purchased unit.

“The division has a very strong presence in the retail segment like utilities and government. This is aimed at gaining a leadership in the retail sector over the next two years,” Ram Krishna, HCL’s corporate vice president said.

The deal, funded through internal accruals, would not affect margins, Krishna said in a conference call with reporters.

“We expect the earnings to be about $8.75 million in South Africa only,” he added.

The deal is expected to close on 1 August, HCL said in a statement.

Shares in HCL Technologies closed 11.2% higher at Rs215.80 in a Mumbai market that was up 3.47%.