For Infosys, Panaya acquisition could just be a beginning

  • Manu P Toms, Bangalore
  • Updated: Feb 17, 2015 14:48 IST

For Vishal Sikka-led Infosys, the $200 million buyout of Panaya Inc, a US-based provider of automation technology, may just be the beginning of a series of acquisitions of highly specialised technology companies.

In a conference call with equity analysts late Monday evening, Sikka - the managing director and CEO of Infosys - said the company would actively pursue acquisitions.

"At any given time, we are looking at a couple (of) dozen companies," he said.

"We are actively looking at acquisitions to fill gaps in our capabilities. Merger and acquisitions is an integral part of our new strategy," added chief finance officer Rajiv Bansal.

Ritika Suri, a former SAP executive who is now heading merger and acquisition team of Infosys, was also a part of the call.

Panaya is an automation technology provider for large scale enterprise software management. In other words, it provides cloud-based quality management solutions to enterprise applications such as SAP and Oracle Business Suit which deals with large organisational needs such as billing system, payment process and HR management.

Panaya's solutions help anticipate and fix software issues with minimum cost and human intervention.

Headquartered in the United States' New Jersey, Panaya is an Israeli technology company with most of its 156-strong team operating out of the country. With the acquisition of Panaya, Infosys gets a toehold in the thriving start-up ecosystem in Israel.

"For an organisation like Infosys it makes immense sense to acquire an overseas headquartered company in area of emerging technologies. This will give them not just additional capability but also enhance their overseas market reach and overseas customer base," said Sanjoy Sen, former senior director of Deloitte Touche Tohmatsu India, who is now a doctoral researcher in strategic governance at the UK-based Aston Business School.

"A midsize company is believed to be more agile and innovative than their gigantic counterparts and easier to integrate too - hence Infosys could look at some quick wins from this initiative as well as long term benefits," Sen added.

The deal also signifies India's growing ties with Israel.

"Israel has arguably the second largest concentration of start-ups after Silicon Valley… In fact, the Prime Minister has spoken to me about the importance of partnering with Israeli innovation," Sikka said at the conference call.

Panaya's revenue could be around $33 million (Rs. 198 crore) as the company is valued six times its revenue. It has 400 active clients.

Sikka said Infosys will retain all of Panaya's employees and its leadership will have "full flexibility". Panaya's CEO Doron Gerstel will report to Abdul Razack, head of big data and analytics at Infosys. Like Suri, former senior SAP executive Razack too was brought in by Sikka.

The former chief technology officer and board member of German technology giant SAP, Sikka joined Infosys as its first non-founder CEO to revive growth at the Bengaluru-based company seven months ago.

Panaya, Sikka's first acquisition, deploys 'big data analytics' to enterprise apps including SAP, Oracle E Business Suite, Salesforce and others that allows customers to know "what will break, how to fix it and what to test – before making any changes," according to its website.

Sikka's onetime-mentor Hasso Plattner, co-founder and chairman of SAP, is an investor in Panaya through Hasso Plattner Ventures.

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