Mastek buys US-based insurance firm for $29 mn
Ahmedabad-based Mastek Ltd has acquired the US headquartered Systems Task Group (STG) International Ltd. for $29 million.
STG provides software solutions to the property and casualty segment of the insurance industry.
According to a Mastek spokesperson, the acquisition is the second such initiative by the company in the current financial year.
As per the modalities of the acquisition, the 100 percent equity stake in STG will be an all-cash transaction with 85 percent of it payable now. The remainder will be linked to ongoing performance and paid by way of earn-outs.
The acquisition is being funded through internal accruals and bank borrowings. Financial and accounting solution provider Avenues was the chief adviser in this transaction.
Giving details of the acquisition, the spokesperson said under the terms of the agreement, Mastek's wholly owned US subsidiary MajescoMastek will hold 100 percent equity stake in STG. It will be operated as STGMastek.
Mastek Chairman and Managing Director Sudhakar Ram said: "Earlier Mastek had acquired the US-based Vector Insurance Services (now VectorMastek) in July 2007. The latest transaction in the non-life segment is expected to noticeably strengthen the company's market position and expand the opportunity pipeline in the overall insurance vertical."
According to Ram, P&C segment enjoys positive ratings in the marketplace and has a high potential market with IT spending by P&C insurers possibly touching $20 billion by 2010 from $10 billion currently.
According to the company's release, the STG management team, including its founder Praful Nikam, will continue to be actively involved in its operations providing support to William McCareter, who will be taking over as president of STGMastek. McCarter had joined Mastek last year as head of its US operations.