Rajiv Bansal walked out of Infosys board meet on Panaya acquisition
Infosys Ltd’s then chief financial officer Rajiv Bansal walked out of a 15 February 2015 meeting where board members of the software services company were asked to approve a proposal to buy Israeli automation technology firm Panaya Ltd, a person close to Bansal said.business Updated: Feb 20, 2017 12:09 IST
Infosys Ltd’s then chief financial officer Rajiv Bansal walked out of a 15 February 2015 meeting where board members of the software services company were asked to approve a proposal to buy Israeli automation technology firm Panaya Ltd, a person close to Bansal said.
It was about 30 minutes into the meeting when the proposal was put to the board. Bansal excused himself from the vote, stood up and walked out, this person said. Board members watched in disbelief.
Bansal, who was not a board member but attended the meeting in his capacity as the CFO, believed that the Panaya acquisition was ill-thought-out and would not offer much by way of value to Infosys, the person said on condition of anonymity. He thought the company was paying too much money and was also upset that as CFO, he had not been kept in the loop during the due diligence process, the person said.
Even so, his reservations did not deter Infosys from eventually agreeing to pay $200 million to buy Panaya; Bansal eventually came around to accepting the decision by Sikka and the board. Two years later, the jury is still out on Infosys’s second-largest acquisition. Over the last month, fresh questions have surfaced over the rationale behind the purchase.
An email purportedly written by an anonymous whistle-blower, dated 19 February, and sent to this newspaper and copied to senior executives of the Securities and Exchange Board of India (Sebi), questioned why Infosys paid $200 million in February 2015 for Panaya when, in the previous month, the company had been valued at $162 million by Israel Growth Partners, which made a $20 million investment to pick up a 12.31% stake.
The Whistle-blower's Claims
About the Panaya deal: “The Board of Infosys blindly approved the deal,” the email said. “The CFO of Infosys at that point of time, Rajiv Bansal, refused to sign off on the deal and, in fact, walked out of the discussion during the board meeting to approve this deal”.
Mint could not confirm if Bansal’s objections to Panaya and another investment made through the company’s $500 million corporate venture arm were the reasons for him being asked to leave Infosys. Bansal also objected to Infosys investing $2 million in Airviz, a personal air-quality monitoring start-up from Carnegie Mellon University, according to the person cited earlier.
Secondly, Infosys has publicly disclosed that SAP’s co-founder Hasso Plattner held about a 6% stake in Panaya. Sikka was a member of SAP’s executive board before he joined Infosys.
According to the whistle-blower’s email and the shareholding pattern in Panaya independently accessed by Mint, Plattner held an 8.33% stake. The email states that the Panaya acquisition made Plattner richer by $17 million.
Finally, Panaya had Rs1.37 crore at the time of the acquisition in February 2016 as against Rs127.29 crore on 1 January 2015 (it had Rs12.6 crore at the start of January 2014), show financial documents disclosed by Infosys.
The email states that Panaya shareholders took out $20 million from the company, leaving Infosys to make a $20 million investment in working capital for Panaya, and eventually spending a higher amount in buying the company. This is reflected in Infosys’s profit and loss statement, which pegs the acquisition cost of Panaya at $225 million.
The person close to Bansal cited above claimed that Infosys in December 2014, four months after Sikka took charge, replaced Deepak Padaki with Ritika Suri as the head of mergers and acquisitions.
Suri, a former colleague of Sikka’s at SAP, was also given the additional mandate of overseeing Infosys’s $500 million innovation fund, and was to report to Sikka, unlike in the past, where the head of mergers and acquisitions reported to the head of finance.
In July last year, Padaki was asked to return to head mergers and acquisitions even as Suri was asked to head the large deals team at Infosys.
Emails sent to Israel Growth Partners seeking comment went unanswered.
“The company takes any whistle-blower complaint seriously and there is due process to investigate any complaint that comes to us,” said a spokeswoman for Infosys. “If we do receive any query either directly or from the regulator, we will respond to it as per the due process.”
(Published in arrangement with Mint)