Carlyle-Backed Infotech Plans Buyouts to Boost Sales

Infotech Enterprises Ltd., an Indian software services provider to aerospace and automotive industries, plans to acquire at least one company in the U.S. this year to expand in its biggest market.

The firm, backed by Carlyle Group LP, will use part of its 6 billion rupees ($96 million) cash for the purchase, Chairman and Managing Director B.V.R. Mohan Reddy said in an interview yesterday. The Hyderabad, India-based company has acquired nine rivals in the U.S. and Europe since 1997, according to the company’s website.

Infotech plans to utilize its record cash pile to expand and revive profit after net income dropped for two straight quarters. The company may spend about $25 million on the acquisition, Reddy said, without identifying a target.

The company’s cash reserves “in the best of times, is not giving more than 9 percent return,” Reddy said. “So, understandably, we are very keen that we should go toward acquisitions.”

Infotech’s shares, which have gained 6 percent this year, rose 2.1 percent to 190 rupees at 2:44 p.m. in Mumbai, the highest since Dec. 19. First Carlyle Ventures Mauritius owns 9.9 percent in the company as on June 30, according to exchange filings.

North America accounts for more than half of Infotech’s revenue, while it generates about 27 percent of sales in Europe, according to Reddy. The company’s sales rose 6 percent to 4.8 billion rupees in the three months ended June 30.

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