Mid-sized technology services firm Coforge Limited said on Monday that it has acquired SLK Global Solutions Private Limited for Rs 918.3 crore. The acquisition is expected to expand Coforge’s BPM operations, strengthen its financial services business, and increase presence in North America.
SLK Global is a business process transformation enterprise offering business process management and digital solutions for the financial services industry. The firm has deep domain expertise in the banking and insurance businesses in North America.
Coforge, earlier known as NIIT Technologies, said it would initially acquire 60 per cent stake in SLK Global, whose founders will completely exit. Fifth Third Bank, the largest customer of SLK global and a significant minority shareholder, will have its stake in the company reduced to 40 per cent and will continue at that level for the next two years. Coforge will acquire an additional 20 per cent stake from Fifth Third Bank after the completion of 2 years.
The transaction is being funded by Coforge with a combination of internal accruals and external borrowings.
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 five 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 per cent despite the impact of Covid-19. The business has registered a three year revenue compound annual growth rate of over 17 per cent. It is a highly profitable business and will be EBITDA margin accretive to Coforge, the company said in a statement.
“We are very excited to welcome SLK Global and its over 7,000 employees into the Coforge family. We are equally excited and committed to the new partnership and client relationship that we have now formed with Fifth Third Bank. Fifth Third Bank shall be a Top five 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,” said Sudhir Singh, Chief Executive Officer, Coforge Ltd.
He added that Coforge’s technology and digital capabilities will be relevant to SLK Global’s customer base 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.
“Fifth Third Bank is excited about the opportunities created by this new partnership. We remain committed to our BPM strategy and the expanded automation capabilities afforded by an IT solutions provider of Coforge’s caliber. We look forward to extending with our new partners the long-term relationship we have enjoyed with SLK Global for the past 15 years,” said Jude Schramm, Executive Vice President and Chief Information Officer, Fifth Third Bank.
Post-closure, the key management personnel at SLK Global, excluding the founder-promoter, will stay on and contribute to its continued growth.
KPMG was the advisor to Coforge, and J Sagar Associates was its legal counsel on this transaction. Avendus Capital acted as the investment banker to all the Sellers and Prabir Talati/Inflexion Advisers as the advisor to the Founders and SLK Global, while Quillon Partners acted as Transaction Counsel and Shardul Amarchand Mangaldas & Co acted as Legal counsel to Fifth Third Bank.
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