Indian software and computer training company NIIT Ltd. has shortlisted 20 companies in the US as potential acquisition targets. The Indian company plans to choose one or more firms to acquire or invest in over the course of the next three months, and hopes to complete at least one acquisition by the end of this year.
NIIT says it is looking for a small to medium sized US firm, which can enhance its core software development businesses. We are looking for a firm that will fit well with our existing operations and competencies. We want to buy a firm that specializes in customized solutions for companies in banking, insurance, manufacturing and telecommunications, says Vijay Thadani, NIIT’s president and CEO.
Thadani himself is moving to the US to spearhead the choice of the firm to be acquired, and says that NIIT will retain the identity of the US firm. The idea is to have India-facing costs, but US facing prices. NIIT in India will be the production center for the US firm we buy, he says, adding that costs for software development in the US are three times that in India. NIIT says it will also look for alliances to strengthen its computer-based training and multimedia business, and to help it grow in new areas related to e-commerce, consultancy and the internet.
To carry out its ambitions, NIIT has arranged for a $100m line of credit, and has appointed an adviser for the deal. Indian financial institution, ICICI Ltd. is putting the line of credit in place, while US investment bank Goldman Sachs is helping NIIT choose a suitable target.
Several Indian technology companies are looking at the US, either to list their stock or to acquire software firms there, or to do both. While NIIT has chosen to acquire a US company first, and then consider a listing, others are using US listings to raise cash to make their US plays. Infosys Technologies Ltd, which this March became the first Indian company to list on Nasdaq, now plans to use the funds it raised to buy a US company and set up software development centers outside India.
