Why the acquisition?
Expected to close in the second quarter of 2017, the acquisition will strengthen Tech Mahindra’s BFSI practice by access to IP and a platform which helps automate end-to-end processes in the lending, investments and insurance market. The acquisition comes in the wake of Tech Mahindra’s strategy of expanding its Fin-Tech capabilities and adding IP and platforms to drive non linearity and play aggressively in the BFSI sector. With the takeover, Tech Mahindra will be able to tap into the $65-87 billion annual spends by UK BFSI companies on software and services.
As part of the agreement, Tech Mahindra has agreed to purchase 100 per cent of the shares of Target Group at an enterprise value of $163.69 million. Target Group will remain a standalone entity retaining its existing brand. The entire management team at Target will stay with the business and continue to have full operational responsibility.
Target Group’s offering
Target Group’s proprietary platform automates complex and critical processing, servicing and administration of loans, investments and insurance. The platform helps deliver high quality services with built in compliance in a highly complex and regulated environment. Its capabilities are easily transferrable to new markets. With this technology, Tech Mahindra intends to leverage its global footprint and enhance the platform to service other markets.
CP Gurnani, MD and CEO, Tech Mahindra, says “Target Group’s strong IP and disruptive proprietary platform significantly enhances our Fintech offerings. 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 look forward to welcoming Target Group’s employees into the Tech Mahindra family.”
Common grounds
Target Group provides BPaaS (Business Process as a Service) offerings in the areas of lending and investment products servicing to its clients, on variable pricing models. Its platform operates at considerable volume with high levels of automation, claiming a 95 per cent ‘straight through processing’. These capabilities are complimentary to Tech Mahindra’s BFSI IT services capabilities and will enhance its Fintech offerings. Tech Mahindra claims that the acquisition will make it one of the top 3 processors in UK Financial Services for certain complex lending and investment product categories.
It will strengthen Tech Mahindra’s European presence and add several new clients by expanding its offerings in the lending, savings and investment and insurance sectors. There is also a significant opportunity to cross-sell Tech Mahindra/ Target offerings in each other’s client base and extend the platform to other markets.
Paddy Byrne, Chairman, Target Group, says “Target Group has been focused on building expertise in the lending, investments and insurance sectors, becoming a market leading player in each of our verticals. We have delivered significant growth over the last four years, with the support of our current shareholder, Pollen Street Capital. We now look forward to the next stage in our growth. 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.”
