The Israeli angle of Infosys’ recent acquisition of Panaya, a software as a service (SaaS) company, for $200 million enterprise value is getting a larger focus after the company’s Chief Executive Officer Vishal Sikka informed an investor call that Prime Minister Narendra Modi himself mentioned to him “about the opportunity to partner with more Israeli innovation”.
Vishal Sikka had visited Prime Minister Modi in New Delhi on January 14 to announce the setting up of a $250-million ‘Innovate in India Fund’ created out of the $500 million set aside for the company’s ‘Innovation Fund’.
The Innovate in India Fund is dedicated for investments in promising Indian companies.
Sikka had earlier accompanied the Prime Minister in November to Brisbane during the G-20 summit.
It’s not clear when the Prime Minister had made the mention. An email sent to Infosys in this regard did not elicit an immediate reply.
According to Sikka, Infosys’ Panaya acquisition has three dimensions. One, to bring Panaya’s CloudQuality suite SaaS to all of Infosys’ customers and to additional package vendors. “Second one is to bring it to additional service lines, and the third one is the presence in Israel,” he said on the investor call.
Ritika Suri, Infosys’ head of mergers, acquisitions, and investments, who also participated in the investor call on February 16, chipped in to disclose that Infosys had just the previous week hosted a delegation from Israel. She also clarified that of Panaya’s 156 employees, a majority were based in Israel. Deccan Herald had reported (Infosys buys Israel-based Panaya in $200-m deal, DH, February 17, 2015) that Panaya was an Israel-based company.
For the record, Infosys’ chief financial officer (CFO) Rajiv Bansal clarified that the Panaya valuation was at six times the multiple of its revenues, which implies it had a topline of around $35 million. Ritika also clarified that there would be no other milestone payments associated with the deal, which means $200 million would be all that would be paid.
Interacting with Deccan Herald during the Q3 results, Vishal Sikka had said the game plan of Infosys is to reach out to the startup ecosystem in the well-established regions of Silicon Valley, Tel Aviv, London, and Beijing.
“We have to emulate companies in other geographies which work on cutting-edge technologies in analytics, data mining, mobility, automation and artificial intelligence. Indian startups should be exposed to those opportunities and our client base will help us in this regard,” he had said.
‘This is only a beginning’
When contacted, an official at the Israeli Consul-General’s office in Bengaluru, who didn’t want to reveal his identity, said the ongoing bonhomie between Israeli startups and Indian firms will flourish.
“Infosys’ acquisition is only a beginning. Lots of Israeli startups are interested in engaging with Indian companies. It gives cutting-edge technology for Indian companies and wider market access for products developed by Israeli firms. So it’s a win-win for both of them,” said the official. He also said the matchmaking is an ongoing process and one more big ticket deal is expected soon with a top-tier Indian IT company.