IT cos plan 3 bn acquisitions

He said the apex industry body has also requested the government to increase the ceiling on funds used for overseas acquisitions from the current 25 million to 500 million. Indian infotech majors like NIIT, Satyam Computers, HCL Technologies, Rediff On The Net, Polaris and a set of other companies have already announced their plans to acquire companies abroad as part of the strategy to grow globally. NIIT is likely to announce theacquisition of of two US companies December-end and has earmarked 100 million for the the same. American investment banker Goldman Sachs is advising NIIT on the buy-out. Datamatics is negotiating with many foreign firms for takeover.

Meanwhile, Shiv Nadar-promoted HCL Technologies is on the look out for e-commerce companies in the US and Europe and has kicked off initial public offer IPO to raise the funds for it. HCL Infosystems has recently acquired a systems development and integration firm, FEC Singapore PTE Ltd, for a consideration of Rs 6.78 crore. The acquisition is part of HCL infosystems strategy for building its revenues from it services.

According to Nasscom, the market cap of Indian IT companies was 23 billion with the top company8217;s contributing 19 billion. In fact, India8217;s software companies, once criticised as quot;body shopsquot; because of the fast buck they made from cheaply available programmers, have reversed the trend and are ready to shop now for overseas firms.

With big cashchests or booming shares which can substitute for currency, Indian companies are now aggressively eyeing buys which could boost market access or bring in skills and strategic positioning crucial for future growth. One watershed this year was in March, when Bangalore-based Infosys Technologies Ltd became the first Indian company to get listed on the US Nasdaq exchange. quot;Atleast five to seven information technology companies will be listed in 2000 in overseas stock exchanges,quot; Mehta said. The New York exchange and Nasdaq are both courting Indian listings.

He said 70 to 80 per cent of the anticipated overseas acquisitions were expected to be made through stock swaps. However, the swiftly growing industry, whose exports are growing by more than 50 per cent annually, has to contend with conservative, often outdated, government regulations. The government currently limits a company to making overseas acquisitions only if its cost does not exceed 25 million.

Nasscom has been lobbying to increase the ceiling to 500million or up to 25 per cent of the market capitalisation of a company. quot;We have been promised they government will be positive on it,quot; Mehta said. Several Indian firms including Silverline Industries, Kale Consultants and CyberTech Systems and Software Ltd, an affiliate of US-CyberTech Systems Inc, are among those which have already shown an interest in acquisitions. CyberTech has planned European acquisitions. Silverline is planning an American Depository Receipt issue to fund acquisitions in financial services software and e-commerce content. Kale says it is looking for Australian or American software firms working in the banking and airline sectors. Infosys chairman N R Narayana Murthy said last month his company was seeking a good proposal for acquisition, and intended the acquisition to be equivalent to about 10 to 20 per cent of Infosys8217; market capitalisation.

Analysts said takeover of foreign companies will help Indian companies to establish a strong client base abroad and boost theircorporate the image.