Infogain Corp acquires Blue Star Infotech’s IT business for Rs 181 crore

Infogain Corp, an information technology services company controlled by private equity firm ChrysCapital, has acquired the IT business of Blue Star Infotech for Rs 181 crore as it targets $500 million in revenue in the next five years.

“Blue Star Infotech’s IT assets are an ideal fit for Infogain with the vision of creating a leading new-age digital services platform. We expect the combined company to grow to half a billion dollars in revenues through organic and inorganic growth within the next five years,” Sanjay Kukreja, managing director at ChrysCapital, said in a statement. Chrys Capital acquired a majority stake in Silicon Valley-based Infogain for $63 million in August in a deal expected to help the company make strategic acquisitions and expand.

The deal highlights the growing sense that small IT companies will likely have to merge with other firms as they look to grow in a tough market, helped with financing from private equity players.

Kapil Nanda, CEO of Infogain, will continue in his current role until July . Sunil Bhatia, CEO of Blue Star Infotech, will join Infogain’s management team as CEOdesignate and will lead the combined entity from July. Nanda will transition to full-time executive chairman of the company .The aggregate consideration for the IT business of Blue Star Infotech and its subsidiaries in the US, the UK and Singapore would be Rs 180.8 crore.

The enterprise value of the deal is about Rs 278 crore. Blue Star Infotech, which is listed on the Indian stock market, is the IT arm of air-conditioning and commercial refrigeration company Blue Star.

It will retain a certain amount of cash, tax receivables and fixed assets with a fair value of about Rs 96.7 crore and as part of the transaction, will merge with the parent company.