Friday, September 19, 2008

M&A Indian Firms: HCL intends to spend upto $2Bn in strategic U.S acquisitions


HCL Technologies' acquisition strategy is three fold; smaller tuck-in buyouts are targeted towards purchasing firms that bring intellectual property (IP) to the company. The company sees these buyouts are in the range of $100 million and less. Some of the recent acquisitions like Capital Stream, Liberata Financial Services and Control Point Solutions fall in this category.

The IT giant is also scouting for Japan and Germany as part of its second level of inorganic growth strategy to expand its geographic reach. Apart from these, HCL's plan includes big buyouts that it calls 'transformation acquisitions'.

"Next two years will be crucial for HCL Technologies because of our proactive research and search for transformation acquisitions. We are active in all three zones of acquisitions and we have a good balance sheet to fund our plans," said Vineet Nayar, CEO, HCL Technologies. The company has cash reserves of $580 million.

When asked about the impact of the recent US financial market turmoil on the company, Nayar said: “HCL is not at risk. Rather the momentum of signing RFPs has gone up as compared to a few months back.” However, he emphasised that the falling discretionary spend and increasing number of deals must coincide so that outsourcing component increases.



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