Infosys is interested in acquisitions in data analytics and SAAS segment, says CEO Salil Parekh

After two acquisitions this year, India’s second-largest IT services company Infosys is looking to acquire more companies and says an acquisition on a scale comparable to its recent tech acquisition is certainly possible.

In an interview to PTI, Infosys CEO Salil Parekh said the company is interested in acquisitions in areas like data analytics and SAAS and may consider expanding into some markets in Europe and the US.

Asked if more acquisitions could be made on a scale comparable to In-Tech’s €450 million acquisition, Parekh said: “Absolutely, I think that would be the size we would look at in terms of scale, and given our structure, we could do a few of those.”

In January, Infosys announced a definitive agreement to acquire 100 percent of the equity in In Semi Technology Services, an Indian semiconductor design company, for consideration (including benefits, management incentives and retention bonuses) of up to ₹280 rupees.

Three months later a larger takeover took place.

In April, Infosys Germany, a wholly owned subsidiary of the Company, entered into a definitive agreement to acquire 100 percent of the share capital of in-tech Holding, a leading provider of R&D engineering services headquartered in Germany, for up to EUR 450 million (approximately EUR 1.5 billion). ₹4,045 crores).

“…we already have a very good engineering services business within Infosys and then we made these two acquisitions, both in engineering services, one on the semiconductor side and one on the automotive side…very strong businesses and we feel pretty good about expanding that footprint,” Parekh said.

He added that Infosys is considering further acquisitions and is considering several companies.

“…we have a good balance sheet and good cash generation and now we are quite confident about integrating acquisitions in different areas. We have done the engineering, we will look at other areas… for example data analytics… we may look at SAAS areas, maybe other geographies in Europe, maybe in the US as well,” he said.

However, Parekh said a lot depends on strategic synergies, financial costs, cultural fit and integration aspects.

“We are continuing to explore and we have things that are normally ongoing but take some time… there are a lot of discussions about strategic fit, financial cost and cultural fit with the company and then how do we integrate them. A lot of those discussions are ongoing and we will see what comes out of it,” the Infosys top brass said.

Asked if he hopes to complete more acquisitions this fiscal year, Parekh said it was difficult to put a timeline on the outcome of the ongoing talks.

“It’s hard to say… we are evaluating a few (of them). But the alignment of strategic parameters, financial parameters, culture, integration… all of that may not work. But these two (InSemi and in-tech) happened relatively quickly… we didn’t do anything for a few quarters before that. It’s not predictable, but the evaluation is ongoing,” he said.

According to Grant Thornton Bharat Dealtracker Q2 2024 report, Indian trade saw a total of 501 deals worth $21.4 billion. The report said Q2 2024 saw the highest quarterly volumes since Q2 2022, while values ​​declined due to the lack of large M&A deals.

Grant Thornton Bharat Dealtracker also reported that there were 132 merger and acquisition (M&A) deals in the second quarter, representing a slight increase in volume but a significant 50 percent decline in value.

According to the report, domestic transactions drove growth, with volumes up 29 percent and values ​​increasing 2.5 times compared to the first quarter of this year. In contrast, cross-border transactions saw a decline, with volumes down 24 percent and values ​​down 85 percent from the first quarter of 2024.