MphasiS buys US firm for $16mn

Overall strategy to strengthen footprint in the US markets.

The MphasiS BFL group, provider of information technology and BPO solutions, today announced that it was acquiring the US-based Eldorado Computing Inc in an all-cash deal of $16.5 million.

Eldorado Computing focuses on health care benefits management solutions. The transaction is expected to be completed in the quarter ending March 31, 2005.

With this acquisition, MphasiS expects to venture into the health care insurance and payments BPO market.

MphasiS Chairman & CEO Jerry Rao said: "This acquisition forms a part of the company's overall strategy to strengthen its footprint in the US markets. This deal provides a perfect strategic fit for MphasiS as it offers a well-established software platform and a health care customer base."

MphasiS had been working with consultancy firm McKinsey & Co for the past six months which had helped it draw up a strategic plan for growth. It has outlined three areas for growth -- financial and technology verticals, moving up the scale in BPO and consultancy.

Eldorado has revenues of $10 million and an employee strength of 75. Its 128 customers include third-party administrators, insurance companies, managed care organisations and unions.

"This company primarily focuses on IT services but has immense potentential in the BPO area as well. The heathcare insurance and payments segments are attractive in the US. This acquisition is the foundation on which we will offer a complete portfolio of services," company CFO Ravi Ramu said.

This deal also allows for a performance based incentive for Eldorado's top management over the next three year.

When questioned on the company's plans on listing overseas, Rao said: "It is not on the cards. We have the required approvals from the board but are yet to take a decision on the timing of the issue owing to various factors."