Zylog eyes more acquisitions

Solution-based IT services provider Zylog Systems is targeting two acquisitions in the US and Europe during this fiscal.

The company, which is tapping the capital markets on July 20 with an initial public offer, declined to elaborate on the acquisitions citing the 'silent period.'

It is looking at acquiring companies in the BFSI (banking, financial services and insurance) and telecom segments, which account for 56 per cent of its revenues, according to Sudarshan Venkatraman, chairman and chief executive officer, Zylog Systems.

The company, which has grown through the inorganic mode over the past five years, will continue to pursue acquisitions that would bring in synergies and value additions to its existing business and new market access. It is scouting for companies in the US and Europe which do not have any offshore presence.

Zylog has completed five acquisitions in the US since 2002 and has invested $5 million in these acquisitions. While they have helped the company enrich its offerings, improve processes and clientele, these companies have contributed 28 per cent of its total revenues for the fiscal 2007.

The Chennai-based company has funded past acquisitions through internal accruals and plans to divert a portion of its IPO funds towards future acquisitions.

While the US accounts for a major chunk of the business, the company plans to expand its operations in Europe, Asia Pacific, Southeast Asia through its subsidiaries in a bid to support clients in the local market as well as global clients in the future. The company is also looking at foraying into the Middle East.

The Rs 403-crore Zylog is tapping the capital market to raise money for funding its expansion programme, which includes setting up two offshore development centres on the IT corridor of Chennai and acquisitions, among others.

It is entering the capital markets with a public issue of 3.6 million equity shares of Rs 10 each through a 100 book building process.

The price band of the issue that closes on July 25, 2007 has been fixed at Rs 330 to Rs 350 per equity share of Rs 10 each.