Tech Mahindra buys UK fintech firm in deal valued at more than 112 million pounds

MUMBAI: Tech Mahindra said it would buy financial technology firm Target Group to boost its platform business process-as-a-service offering in the banking sector, in a deal valued at more than 112 million pounds.

In a filing with the Bombay Stock Exchange, TechM said the deal had an enterprise value of 112 million pounds plus an adjustment for surplus cash of upto 8 million pounds.

The company will pay 64 million pounds upfront and a deferred consideration of upto 16.28 million pounds in 2017. TechM will also pay an amount of 17.1 million pounds on account of loan notes at closing.

Tech Mahindra said the Target Group’s proprietary platform automates complex and critical processing, servicing and administration of loans, investments and insurance.

“This acquisition will make us a formidable player in the UK BFSI market with over 50 major financial institutions as clients. The acquisition lies at the confluence of several of our strategic priorities – add IP, double BFSI revenue and expand European footprint,” Tech Mahindra CEO CP Gurnani said in a statement.

UK-headquartered Target has 740 employees and the management team at Target will stay with the business and continue to have full operational responsibility. It had revenues of 51 million pounds in 2015.

Target’s management is also rolling over 7.6% of their equity value into the company, currently worth about 6.8 million pounds, which will be paid out in 2020 as a second deferred consideration. This consideration will be equal to 7.6% of the equity value of the company in 2020, depending on the performance of the company during 2017-2019.

TechM is providing a corporate guarantee of not more than 30 million pounds in relation to the 2020 payout.

This is TechM’s latest in a slew of acquisitions. It bought fabled Italian car design firm Pininfarina in December.