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IL&FS, CitiBank exit Kshema, SCS brings in $9.2 m

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CIOL Bureau
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BANGALORE: IL& FS Venture Capital (IVC) and CitiBank are shedding their entire stake in Kshema Technologies in favour of Singapore Computer Systems (SCS), a Singapore-based ICT service provider.



SCS is infusing $9.2 million to pick up 30 per cent stake in Kshema of which 17.3 per cent comes from IVC and Citibank. Interestingly, Global Technology Ventures which seeded the company as India’s first venture capital venture and held 50.9 per cent has shed a marginal 4.6 per cent in favour of SCS. The promoter’s stake has been diluted by about 8.6 per cent.



The investment is subject to approval by India’s Ministry of Commerce and Industry and the Reserve Bank of India.



Kshema Technologies Equity Holding Pattern

Old New
GTV - 50.9% GTV -  46.8%
IVC - 12.7% SCS - 30%
CitiBank- 4.6% Promoters+ESOP - 23.2%
Promoters + ESOP- 31.8%  

SCS is listed in the Singapore Stock Exchange with competencies in IT and Business Consultancy, Systems Integration, Outsourcing, Networking, E-Business and R&D/Product Development. The company employs 2,000 people who operate from Singapore and eight other countries in the Asia-Pacific region.



This comes in the wake of several rumours doing the rounds which included Kshema being merged with other GTV funded companies to create a large entity to perk up valuation for a potential IPO.



Kshema, Chairman and CEO, Anant Koppar, said, "As a high-achieving organization, we’ve always shown admirable levels of prudence and maturity in partnering well. With the growing opportunity in current markets, we were in search of a strategic partnership that would not only be in step with our overall strategy, but would also spur our future growth more aggressively. SCS is an established systems integrator and with their wide network and capabilities, we can now broaden our offerings and increase market access as well."



With this Kshema plans to invigorate its businesses in the areas of ERP implementation, data storage, call center and disaster management expertise. And a shot in the arm to its Asia Pac business since SCS already has an established business in that region.



"Our investment in Kshema allows SCS to strengthen both market presence and domain expertise. We chose Kshema because of its good track record for revenue growth and profitability, strong management team, and strong domain knowledge and expertise. Working with Kshema, we hope to achieve synergies through sales and marketing, technical collaboration, research and development and various other initiatives," said SCS, President and CEO, Stephen Yeo.



In a bid to cross leverage each other’s market reach, SCS expects to establish its presence in USA and Europe to extend its service footprint for customers whom SCS is already serving in the region. However, the big cake for SCS seems to be Kshema’s domain knowledge and expertise in embedded technologies, which is tipped to be a fast-growing area. According to the Nasscom-McKinsey Report 2002, the embedded software market will achieve a CAGR growth of 16 percent over the next three years.



Kshema has maintained over 50 percent CAGR in revenue for the last three years. For the financial year ended 31 March 2002, the company achieved revenues of $11.7 million with a net profit after tax of $2.6 million.

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