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Following two significant acquisitions earlier this year, Infosys, India’s second-largest IT services company, is actively pursuing additional opportunities and is open to acquiring firms comparable in scale to its recent technology purchase.
In a recent interview with PTI, Infosys CEO Salil Parekh revealed that the company is keen on expanding through acquisitions in areas such as data analytics and software as a service (SAAS), with potential opportunities in Europe and the United States.
When asked if future acquisitions might be as substantial as the In-Tech deal, valued at 450 million euros, Parekh affirmed, “Absolutely. We are targeting acquisitions of that magnitude, and with our current structure, we are capable of managing multiple such deals.”
Earlier this year, Infosys reached a definitive agreement to acquire 100 percent of InSemi Technology Services, a semiconductor design services firm based in India, for a total consideration of up to Rs 280 crore, including earn-outs and management incentives.
A larger acquisition followed in April when Infosys Germany, a wholly-owned step-down subsidiary, agreed to purchase 100 percent of in-tech Holding, a leading engineering R&D services provider headquartered in Germany, for a maximum consideration of 450 million euros (approximately Rs 4,045 crore).
Parekh emphasized that Infosys already has a strong presence in engineering services and is enthusiastic about expanding further. “After our recent acquisitions in semiconductors and automotive engineering, we see substantial growth potential and are looking to broaden our footprint.”
Infosys is currently evaluating several acquisition opportunities and is exploring additional sectors like data analytics and SAAS, as well as regions including Europe and the US. Parekh noted that many factors will influence these decisions, including strategic alignment, financial considerations, cultural fit, and integration challenges.
“We are actively pursuing several opportunities, but these processes are complex and time-consuming. While the recent deals with InSemi and In-Tech were completed relatively quickly, there may be periods with no new deals. The outcome of ongoing evaluations is uncertain, but we are making progress,” Parekh explained.
According to the Grant Thornton Bharat Dealtracker Q2 2024 report, Indian deal-making included 501 deals valued at USD 21.4 billion. Although the second quarter of 2024 saw the highest quarterly deal volumes since Q2 2022, the total value decreased due to a lack of major transactions. The report highlighted that M&A activity in Q2 2024 involved 132 deals worth USD 6.2 billion, marking a slight increase in deal volume but a significant 50 percent drop in value compared to earlier quarters.
The report also noted that domestic deals drove growth, with volumes rising by 29 percent and values increasing 2.5 times compared to the first quarter of the year. In contrast, cross-border deals experienced a decline, with volumes falling by 24 percent and values dropping by 85 percent compared to the previous quarter.
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