Coforge shall initially acquire 60% stake in SLK Global, with the latter's founders completely exiting
Fifth Third Bank’s stake in the company will be reduced to 40% and shall continue at that level for the next 2 years
IT solutions organisation Coforge Limited on Monday announced that it has signed definitive agreements to acquire a controlling interest in SLK Global Solutions Private Limited for approximately ₹918.3 crore.
The agreement states that Coforge shall initially acquire 60% stake in SLK Global, with the latter's founders completely exiting. "Fifth Third Bank’s stake in the company will be reduced to 40% and shall continue at that level for the next 2 years,"the IT company said in a regulatory filing.
As part of the transaction, Fifth Third Bank has committed to remaining a significant customer of SLK Global and has also committed a base volume over 5 years starting FY22.
SLK Global reported consolidated revenue of $62 million during FY20 and is expected to report consolidated revenue of $73 million during FY21, representing a growth of about 15% despite the impact of Covid-19. Coforge further said in a statement. The business has registered a three-year revenue CAGR of over 17%.
Commenting on the deal, Sudhir Singh, Chief Executive Officer, Coforge Ltd, said,“We are very excited to welcome SLK Global and its over 7,000 employees into the Coforge family. Fifth Third Bank shall be a Top 5 client of the firm and as our valued JV partner we look forward to creating a deep and mutually rewarding partnership with them in the years to come. We expect very strong business synergies to be generated through this transaction... Coforge’s technology and digital capabilities will be highly relevant to SLK Global’s customer base that includes several marquee names in the BFS and Insurance industries, while the latter’s capabilities will enable Coforge to compete more effectively for deals that have a major BPM/BPO operations component. SLK Global also provides Coforge with an attractive tier 3 India city delivery location."
The transaction is being funded by Coforge, earlier known as NIIT Technologies Ltd, with a combination of internal accruals and external borrowing, the company said. Post-closing, the key management personnel, excluding the founder-promoter, will stay on and contribute to its continued growth.
On Monday, Coforge Ltd's scrip on 1.74% lower during late-trade at ₹3,112.85 apiece.