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On Wipro’s Citi Technology Acquisition – Analysis

December 24, 2008

Wipro has acquired Citi Tech Services (CITOS), Citigroup’s India-based captive, for an all-cash deal of US$127m. CITOS has CY08 projected revenue of US$80m.

According to our estimates, Citi would, through CITOS, provide Wipro with revenue of at least US$500m over the next six-year period. The acquisition is expected to close in Mar-09. [The same way like TCS – Citi BPO Deal that happened in October-08]

Operations of CITOS:
CITOS provides Technology Infrastructure Services (TIS) and application services. It has about 2,050 people (1,650 employees and 400 on contract) and development facilities in four locations – two each in Mumbai and Chennai. CITOS gets business from Citi entities worldwide.

On a TTM basis, CITOS has an EBIDTA margin and NPM of ~38% and ~42%, respectively, assuming an annual run-rate of US$80m in revenue.

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