Mumbai: Mumbai-based enterprise IT infrastructure management services provider Allied Digital Services Ltd has acquired an 80.5-per cent stake in US-based remote management services provider EnPointe Global Services Llc, for an equity valuation of $30 million in a cash and equity-swap deal. EnPointe Global Services, with revenues over $340 million, is a carved out subsidiary of EnPointe Technologies Inc. 

The transaction entails an upfront cash payment of $10 million and issuance of 745,000 equity shares of ADSL to ENPT, with an additional cash infusion of $4 million in En Pointe Global.

Allied Digital says the acquisition was revenue and earnings accretive to ADSL and is expected to strengthen the opportunity pipeline for the company in the US market for its remote service offering and also use the acquired entity as a platform for several other inorganic growth initiatives across the globe.

En Pointe Global has contracted revenues of $40 million, with gross margins of 35 per cent. En Pointe Global  will receive on going marketing & business support from $350 million. En Pointe Technologies, which has a strong sales team, reach & credibility established over last 15 years of operation in the US market & an established presence across 44 states and a  client base which includes several Fortune 1000 Corporate across BFSI, healthcare, retail, manufacturing, aviation, transportation sectors.

Chairman and managing director of Allied Digital, Nitin Shah, said, ''The fact that En Pointe is a well-established company serving the US market, gives us a ready base to expand our presence and leverage on the tremendous cross selling opportunity in remote management services and managed security segment in the US.''

The global market opportunity for remote infrastructure management services has been predicted to reach $70 billion, according to industry association Nasscom. ADSL's expertise in Remote IT infrastructure management services, will enhance EGS's ability to up sell High-end enterprise and data centre management service offerings to ENPT wide customer base across the US by offering them cost effective remote infrastructure management, managed security, compliance monitoring and reporting services

Allied Digital has trported a growth of 45 per cent revenue CAGR and 70 per cent profit CAGR for last three years, with a strength of more than 1800 professionals from different managerial & engineering backgrounds, across 132 locations within India, caters to a diverse customer base across the BFSI, manufacturing, rtail, telecom and BPO verticals.

CEO of En Pointe Technologies, Din Bob, said, ''We are very pleased to announce our alliance with Allied Digital, which will help us consolidate our IT infrastructure Managed Services business, by leveraging on the service focus and lower servicing cost platform. This relationship would help us expand our service offering to encompass the entire managed services offering to our customers and also enable new customer acquisitions across the US''.

Din Bob stated ''With Allied Digital's remote managed services (NOC), security monitoring and compliance reporting offering (SOC), we will be able to leverage our current customer relationships and our presence in the US market to achieve a leadership position in the end to end Enterprise IT services  offering.''

CNBC-TV18 shares with domain-b its exclusive interview with Nitin Shah:

Could you tell us a bit more about EnPointe?
EnPointe is a NASDAQ-listed company and there are three different divisions. One is of selling products and second is software license selling. The third we were interested in is infrastructure management services (IMS). So we have carved out that particular division of that company and have invested about 80.5 per cent  in that company.

What kind of revenues and profits does it have?
The blended revenue was about $350 million and profitability was about $6 million.

For the entity that you will now pick up what kind of revenue and profit performance has that particular part had?
For the part that we are taking the revenue is $40 million, it is a pure services deal, which is repetitive every year and so we are happy to get a $40 million business coming to us straight in the IMS space and we might be achieving about 15 per cent - 20 per cent EBITDA margin in the first year itself.

Is this leg of business that you are set to acquire, profitable?
Definitely profitable because a lot of activity is happening onshore; we will try to bring it offshore and try to move the service activity which can be done remotely. So by using Indian forces we might increase the profitability.

So in our business we take about 40 per cent of EBITDA margin, in this case since we are moving gradually, probably we would reach about 15 per cent-20 per cent EBITDA margin in the first year itself.

Is that $30 million you are paying entirely cash and from the proceeds of the QIP?
Of the $30 million, we are providing 40 per cent cash and 60 per cent equity, so that makes up about 4 per cent dilution of our company.