Infosys to buy out Citigroup stake in Progeon for Rs518 crore
21 Apr 2006
Confirming media reports and market speculation, Infosys Technologies announced yesterday that it would buy out the 23-per cent stake held by Citigroup in Progeon, the BPO subsidiary of Infosys. The all-cash deal has been concluded at Rs518 crore or $115 million. The transaction is expected to be completed by July this year.
Citigroup, which pumped in $20 million as venture fund investment in Progeon at its inception, has made a profit of $95 million from the investment.
Progeon, which is just four years old, is the 10th-largest third party BPO company in the country according to NASSCOM Rankings for the last financial year. The company employs more than 7,000 people, concentrating mostly on non-voice processes. Progeon had 22 clients as of 31 March 2006.
For the financial year 2005-06, Progeon has reported a net profit of $20 million on revenues of $85 million. Revenue guidance for the current year is at $125 million, a growth of 47 per cent. The company contributed 4 per cent of Infosys's consolidated revenues during the previous financial year, as compared to 2.7 per cent for 2004-05.
The deal values the company at $500 million, or four times its revenue guidance for 2006-07.
Infosys may merge Progeon with itself at a later date, in line with its strategy of offering integrated end-to-end services.
