The Hindu : Business : Oracle buys 41 p.c. stake in i-flex in $600 m deal

Online edition of India's National Newspaper
Wednesday, Aug 03, 2005

Business

Business

Oracle buys 41 p.c. stake in i-flex in $600 m deal

K. T. Jagannathan

Citigroup divests its entire holding; management team to remain

IN BUY MODE: Oracle office in Redwood Shores, California. — Photo: AP

CHENNAI: Mumbai-headquartered $262 million i-flex Solutions, an IT solution provider for the financial services industry, is set to change hands with the Citigroup finally calling it quits.

Oracle, an enterprise software company, on Tuesday, said it had penned a deal to acquire 41 per cent stake held by Citigroup Venture Capital International in i-flex Solutions.

To make open offer

Following this, Oracle will make an open offer to buy an additional 20 per cent of the shares outstanding from the remaining shareholders as per the SEBI (Securities and Exchange Board of India) regulations.

The total outgo for acquisition was expected to be a maximum of $909 million — $593 million for Citigroup's 41 per cent stake held in i-flex through a Mauritius-based entity and up to $316 million for open offer to acquire 20 per cent stake from remaining shareholders.

Subject to regulatory approvals, the transaction is expected to close by the end of 2005.

Besides Citigroup, select top management functionaries together hold around 15 per cent in i-flex. The public holds the balance. i-flex went public in June 2002 through the book-building route.

Citigroup Venture Capital quits after staying invested in i-flex for over 12 years.

Citigroup on a `sell mode'

The Citigroup appears to be on a `sell mode' even as Oracle has gone on a buy mode. It may be recalled that the Citigroup merged one of its ventures, Orbitech, with the Chennai-based Polaris sometime ago. Now it is divesting from i-flex. It has another venture in India — e-serve. The Citigroup got it de-listed. But it still has considerable stake in Polaris. Oracle's acquisition of PeopleSoft made headlines across the globe. Now comes its entry into i-flex.

Strong relationship

Deepak Ghaisas, Chief Executive Officer and Chief Financial Officer, i-flex Solutions, said the Citigroup had a representative on the board of the company. Indications are that the Oracle President Charles Phillips will now join the i-flex board.

Mr.Ghaisas asserted that there already existed a strong relationship between i-flex and Oracle. The dominance that Oracle was enjoying in the Tier-I banking and financial services segment would keep i-flex in good stead in the long run, he added. In the near-term, Mr. Ghaisas saw no major change in i-flex following the change of ownership.

Software products from i-flex Solutions support corporate banking, consumer banking, investment banking,

Internet banking, asset management and investor services. i-flex Solutions has provided software services to 575 banks in 115 countries.

Oracle said that the current i-flex management team would continue to run the company and align product development, sales, marketing and services activities with Oracle. The i-flex's service organisation would continue to provide deep domain expertise to major banks around the world.

We have enjoyed a long and highly successful partnership with Oracle. This transaction will be a logical evolution of our relationship, said Rajesh Hukku, Chairman and Managing Director of i-flex Solutions, in a release.

Aligning with Oracle, we can jointly offer an unmatched value proposition to our global customers with truly integrated solutions across the front, middle and back office, the release quoted him.

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