<article>Mumbai-based software services firm <a style="color: #000080;" href="http://dealstreetasia.com/tag/tech-mahindra">Tech Mahindra Ltd</a> has entered into an agreement to acquire UK-based processing platform company <a style="color: #000080;" href="https://www.targetgroup.com/">Target Group</a>, at an enterprise value of 112 million pounds.</article>

Mumbai-based software services firm <a style="color: #000080;" href="http://dealstreetasia.com/tag/tech-mahindra">Tech Mahindra Ltd</a> has entered into an agreement to acquire UK-based processing platform company <a style="color: #000080;" href="https://www.targetgroup.com/">Target Group</a>, at an enterprise value of 112 million pounds.
“The valuation is an enterprise value of 112 million pounds and an adjustment for surplus cash of up to 8 million pounds. Tech Mahindra will pay an amount of up to 64 million pounds upfront and a 2017 deferred consideration of up to 16.28 million pounds,” Tech Mahindra said in a statement.
The transaction, which is expected to close in  second quarter of FY17, will help Tech Mahindra to strengthen its presence in the banking and financial services space as well as augment it&#8217;s position in the European market.
“The 100 per cent acquisition strengthens Tech Mahindra’s BFSI practice by access to IP and a platform which helps automate end-to-end processes in the lending, investments and insurance market,” the company said.
The acquisition will enhance Tech Mahindra’s capabilities and allow it to capture a larger share of the 45-60 billion pound annual spend by UK BFSI companies on software and services. The company intends to leverage its global footprint and enhance the platform to service other markets.
“This acquisition will make us a formidable player in the UK BFSI market with over 50 major financial institutions as clients. The acquisition lies at the confluence of several of our strategic priorities – add IP, double BFSI revenue and expand European footprint,” Tech Mahindra managing director and chief executive officer C. P. Gurnani said.
Target Group will remain a standalone entity retaining its existing brand, and it&#8217;s entire management team will stay with the business and continue to have full operational responsibility. At present, the UK-based company has around 740 employees, and had reported revenues of 51 million pounds in 2015.
&#8220;Target Group’s strong client relationships help it generate significant recurring revenues.  Target Group also has a strong pipeline which provides for high earnings visibility and cash flow generation,&#8221; Tech Mahindra said.
Under the terms of the deal, Tech Mahindra will also payback an amount of 17.1 million pounds on account of loan notes at closing. In addition, the management is rolling over 7.6 per cent of their equity value into the company (worth 6.8 million pounds) which will be paid out in 2020 as a second deferred consideration.
Further, the Indian firm will provide a corporate guarantee of up to 30 million pounds  in relation to the payout in 2020.
Indian IT companies have been in acquisitive mode lately. Tech Mahindra&#8217;s name emerged as one of the top contenders for Mphasis, which was later bought by Blackstone. In December last year, Mahindra and Mahindra Ltd and affiliate Tech Mahindra, through a special purpose vehicle,  agreed to buy a 76.06 per cent stake in Italian car designer Pininfarina SpA, for 25.3 million Euros.
Another Indian IT major<a style="color: #000080;" href="http://dealstreetasia.com/tag/hcl-tech"> HCL Technologies</a> has also been expanding aggressively. In January, HCL Technologies is acquired UK-based Point to Point Ltd (PPL) and Point to Point Products Ltd (PPPL) for about $11 million. Then in February, it announced the acquisition of the external IT (information technology) business of Sweden’s Volvo Group. And most recently, it agreed to buy all of the business done by Mumbai-based software firm Geometric Ltd, except a joint venture the latter has with Dassault Systèmes SA, in a share-swap deal valued at $190 million.
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 Tech Mahindra Ltd has entered into an agreement to acquire UK-based processing platform company Target Group, at an enterprise value of 112 million pounds.

India: Tech Mahindra to buy UK-based Target Group at £112m valuation

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India: Tech Mahindra to buy UK-based Target Group at £112m valuation

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