MphasiS to buy UK's Princeton

MphasiS, a Rs 700 crore IT & BPO services firm, is acquiring UK-based Princeton Consulting in an all-cash deal valued close to Rs 65 crore

Princeton, a privately held and a profitable venture, is a 100-man firm focussing on the customer relationship management (CRM) space through package implementation (like Siebel) and follows this up by customer support services.

It has an annual revenue run rate of close to Rs 54 crore and this firm comes into MphasiS's fold with Rs 27 crore cash.

The net value, taking this cash into consideration, works out close to Rs 38 crore for MphasiS, which will be funded with its cash reserves of Rs 117 crore.

MphasiS announced that this transaction is expected to be immediately EPS accretive. Noted global venture capital fund 3i Ventures, one of the key investors in Princeton, exit with this deal.

This is MphasiS' fourth acquisition after Navion in China for IT services, followed by Onida Infotech for ERP consulting and Kshema Technologies for technology services.

MphasiS in the recent past has been seen to be struggling as its IT services arm has not been able to deliver good numbers to the overall balance sheet.

The company attributed this to "a demand and supply gap in terms of manpower for the IT services business which they are correcting with an addition of 230 professionals."

The net profit of the IT services business took a major 66 per cent hit during Q3FY05 to Rs 12.55 crore from Rs 20.95 crore reported during Q3FY04.

This impacted the overall bottomline for MphasiS as it reported a drop of 5.7 per cent in its Q3FY05 net profit to Rs 26.8 crore from Rs 28.5 crore posted during Q3FY04.

Said Jerry Rao, chairman and CEO, MphasiS: "We believe that the acquisition of Princeton will offer us an access to business process improvement consulting skills as well as an established client base. Through this acquisition, we are excited to be able to broaden our services offering for BPO and IT services in the UK and other European markets."