India’s Tech Mahindra Ltd. (NSE: TECHM), a specialist in digital transformation, consulting and business re-engineering, has agreed to acquire UK-based Target Group, one of the leading processing platform companies in the UK, from private equity firm Pollen Street Capital, for £120 million ($175 million).
Tech Mahindra is one of India’s top five IT giants, together with rivals Tata Consultancy Services (TCS), Infosys, Wipro, and HCL Tech, all of which have been seeking to expand lately by way of overseas acquisitions.
Target Group is a leading provider of business process outsourcing (BPO) and software solutions, with 740 employees and a strong client franchise. The company serves over 50 major financial institutions across the globe, including clients such as Goldman Sachs, Morgan Stanley, Credit Suisse, Barclays and Shawbrook Bank. Target Group generated revenues of £51 Million in 2015, with a three-year revenue CAGR of 22%, the company says.
Target’s fintech platform manages assets in excess of £24 billion, enabling its clients to automate complex critical processing, servicing and administration of loans, as well as investments and insurance. Its platform operates at considerable volume with high levels of automation, with 95% straight through processing.
Target systems currently process over 18 million accounts and collect £3 billion of direct debit payments each year on behalf of both private and public sector clients in the UK, Europe, New Zealand and Australia. The company was founded in Cardiff in 1979.
“Target Group’s strong IP and disruptive proprietary platform significantly enhances our Fintech offerings,” said Tech Mahiondra’s MD & CEO, CP Gurnani. “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.”
“We have delivered significant growth over the last four years, with the support of our current shareholder, Pollen Street Capital,” said Target Group’s chairman, Paddy Byrne. “By joining with the USD 4 billion Tech Mahindra, it will allow us to serve our clients better through greatly expanding the solutions and services we provide.”
The transaction is expected to close in Q2 FY17, subject to the receipt of regulatory approvals.
Target Group will remain a standalone entity retaining its existing brand, which has a strong reputation in the marketplace. The entire management team at Target will stay with the business and continue to have full operational responsibility.
Tech Mahindra is a USD 4.0 billion company with more than 105,000 professionals across 90 countries, providing services to over 800 global customers including Fortune 500 companies. The company operates in two sectors, telecom business and enterprise solutions business. The company is based in Mumbai, India.
Tech Mahindra is part of India’s USD 16.5 billion Mahindra Group multinational conglomerate, which employs more than 200,000 people in over 100 countries. Mahindra has a leadership position in various key industry sectors, including primarily tractors, utility vehicles, information technology, financial services and vacation ownership.
In addition, Mahindra has a strong presence in the agribusiness, aerospace, components, consulting services, defense, energy, industrial equipment, logistics, real estate, retail, steel, commercial and two-wheeler industries. Mahindra was founded in 1945 and is headquartered at Mahindra Towers in Mumbai, India.
London-based Pollen Street Capital, formerly RBS Equity Finance, was formed in November 2013 as a spinoff from the Royal Bank of Scotland. The firm is focused on investing in businesses in the financial services sector, and has invested over £1.2bn in a range of businesses across all stages of development.