Infosys to buy out Citigroup stake in Progeon for Rs518 crore

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.