Prism Informatics Buys 18% In Former Promoter Idhasoft; On Way To Majority Stake

Software development and consulting company Prism Informatics has acquired 18 per cent stake in privately held IT consulting firm Idhasoft Ltd (which is many times its own size) for an undisclosed sum, the company has said on Thursday.

With this acquisition, Prism's position in the US market will be strengthened by Idhasoft's enterprise architecture, implementation and technology consulting skills, coupled with Prism's broad management consulting, technology and focus on exploring different geographies and global delivery capabilities, the statement adds.

"We are delighted to be entering into this venture with Idhasoft and believe that this will provide an opportunity to bring together the experience and technology skills of Idhasoft and the global network and capabilities of Prism," Alok Pathak, managing director of Prism Informatics commented on the acquisition.

On the BSE, shares of Prism Informatics closed at Rs 80 per unit, down 4.5 per cent in a weak Mumbai market.

Idhasoft offers a wide range of products and services for major industry verticals including education, healthcare, retail and supply chain. Idhasoft has strategic alliances with all leading technology vendors including SAP, Oracle, Microsoft, IBM and HP.

The deal is interesting as this, in effect, means that a listed company is on its way to buy a majority stake in its former promoter. Idhasoft had picked around 74 per cent stake in Prism Informatics in 2009, which got diluted with preferential issues, besides the stake sale by Idhasoft. As of June 30, 2011, Idhasoft held around 10.4 per cent of Prism Informatics. It was also struck off from the classification of a promoter and is now listed as a public shareholder.

Meanwhile, Alok Pathak, founder & CEO of Idhasoft, also became the CEO of Prism Informatics and the company adopted a string-of-pearls acquisition strategy, striking around half a dozen deals in the past two years. It also acquired a few group firms belonging to its promoter Idhasoft.

Last month, Prism Informatics board approved investing in Idhasoft Ltd by way of subscription in rights issue and purchase of equity shares from existing shareholders of Idhasoft for a total stake of up to 51 per cent.

Now, with the proposed acquisition of the majority stake in its former promoter many times its size, Prism will be, in effect, looking to consolidate its financials with Idhasoft. Prism Informatics had revenues of just Rs 66 crore, with Rs 90 lakh profit for the year ended March 31, 2011. In contrast, Idhasoft is estimated to achieve a turnover of Rs 400 crore for the current fiscal year and Rs 450 crore in FY13.

Interestingly, the firm disclosed early this month that Saurabh Bankimchandra Dani, belonging to one of the promoter groups of Asian Paints and promoter of Secure Matrix Pvt Ltd, has been included as promoter of Prism Informatics. But currently, he does not own any stake in Prism Informatics.