Mumbai: Mid-sized software services firm Mascon Global Ltd is close to making an acquisition in the US at an estimated deal size of more than $30 million (Rs129 crore), its chairman, K. Chandra, said.
“When we complete the acquisition, we will have a strong presence in wealth management and asset management practice,” Chandra said, adding he intended to rebuild a practice in which it had been active earlier. The target firm has a strong presence in banking, financial services, insurance and life sciences, he said.
The acquisition will add $40 million to the company’s revenues in 2007-08 and $5 million to the earnings before interest, depreciation, taxes and amortization, he said.
Mascon Global is planning to structure the acquisition as a stock-and-cash deal. “When we do the acquisition, we are offering a part of the company as shareholding to the new guys so that they can continue to work with us for the next five years,” Chandra said.
The stake offered would be in the 3-4% range, but in return, the target company would have to give a performance guarantee in terms of revenues and profits. The company has obtained the board’s approval to raise $20 million through issue of global depository receipts to fund the acquisition, and the process for this would be set in place once the deal is finalized, he said.
In 2007-08, Mascon expects revenues to exceed $200 million, including the acquisition.
Currently, nearly 90% of the company’s revenues come from the US and the rest from Singapore and the UK. “We have $7 million coming out of UK and our intention is to quadruple that in the next 18 months through acquisitions and growth,” Chandra said.
By 2010, the company expects to have 70% revenues from the US, 18% from Europe, 7-8% from Japan and the remaining from India.
Earlier, Chandra had said he expected net profit to have more than doubled in 2006-07, while revenues were seen to have risen more than 40%.
The company expects to report net profit of $11-12 million and revenues of $122 million, he said.
The company’s growth comes from its manufacturing, life sciences and telecoms segments.
Revenues from life sciences, which were at $22 million last year, would increase to $38 million in 2007/08, that from manufacturing would rise to $45 million from $25 million, while financial services would contribute $40 million, he said.
Mascon shares were up 6.6% to Rs12.06 in Mumbai market.