Oracle to take control of India's I-Flex

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Oracle is to invest nearly $1bn to gain control of I-Flex Solutions, the Mumbai-based manufacturer of the world's best-selling software for banks, in the largest cross-border takeover of an Indian technology company.

Oracle will acquire Citigroup's 41 per cent stake in I-Flex for $593m and invest $316m in a mandatory open offer to gain up to 20 per cent more of the equity of the company, which was set up by the US bank nearly two decades ago.

The transaction is the latest in a trend that has seen global technology companies, such as IBM, or US private equity funds gain control of growing Indian companies in the services, product or call-centre segments.

Oracle's first big acquisition in a country where it has a large and expanding software development centre, is designed to boost the US technology company's applications business by adding industry specific expertise.

I-Flex, which will continue to operate as a stand-alone, listed entity, designs, produces and services software used across a bank's operations.

Citigroup accounts for 40 per cent of I-Flex's revenues, and that relationship will be unaffected by the changed ownership, says I-Flex.

The share price of I-Flex, which went public in Mumbai in 2002, closed 8.24 per cent higher at Rs896.15. The transaction was announced after Indian markets closed.

Charles Phillips, Oracle president, said that although I-Flex had been the foremost global supplier of application software for banks since 2002, large “banks were not prepared to take a bet on a smaller company - now we've got a powerful combination”.

He said the US giant would continue to look for more “domain expertise that allows us to get beyond the back office and deeper into industries”.

Mr Rajesh Hukku, chairman and managing director of I-Flex, which earned net income of $46m on sales that climbed 42 per cent to $261m in the fiscal year ending in March, said the Oracle relationship would give I-Flex access to the world's biggest banks.

FINANCIAL TIMES

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