Polaris open to strategic investment
City-based Polaris Financial Technology Ltd (Polaris), operating three financial information technology (IT) verticals - software services, products and cloud computing - is open to investment from a strategic investor for its products and cloud computing divisions, a top company official said Monday.
The Rs.2,049-crore revenue company's board recently authorised the management to explore options, including restructuring, for the company's next phase of growth, with a view to maximizing shareholder value.
"The investors for the three lines of business are different. We are open for partners for our cloud business, core banking solution (CBS) and other product lines. We may look for more than one partner as our product lines are different," Arun Jain, chairman and CEO told IANS.
He said the services, products and cloud computing arms need different investment and business strategies -- product business, for instance, is a long-term game needing continuous investment.
According to Jain, some interested parties based in the US and Japan had expressed interest in partnering with the company for product business.
He said the investor community is not able to understand the company's three business lines and hence the decision to look at restructuring operations to maximise shareholder value.
According to Jain, the company would explore all options -- demerging the products or some of the products and cloud business into separate companies -- and also bring in a strategic partner for the demerged business.
Jain said the company had hired Boston Consulting Group (BCG) to look at Polaris and whether it has unlocked value, given its deep intellectual capital.
"BCG spoke to us, and also our customers," he said.
Jain said the Indian attitude towards investments is different from what it is elsewhere in the world and cited group company's Adrenalin eSystems Ltd's experience - a human resources (HR) software product company also in the cloud computing space.
"After investing around Rs.50 crore in the company we decided to halt. On the other hand, the US-based Workday Inc, a cloud computing company in the HR space, invested around USD 200 million while still incurring losses. The US company, which went public, is valued at around USD 8.2 billion," Jain said.
Cloud computing business needs continuous investment requiring partners, Jain remarked.
Last quarter, the company suffered a loss of Rs.20 crore in its cloud computing business.
While Jain agrees that product business has different funding needs, he refutes the view that the division is run with an element services business mentality.
He said the company has a robust product roadmap and has been investing on products that the market demands.
Last year, nearly 25 percent (around Rs.500 crore) of Polaris revenue came from its product division.
As for restructuring, the management is set to finalise plans within 90 days and present its views to the Board during the next quarter.
According to Natarajan Narayanasamy, group chief financial officer, Boston Consulting Group in its report had suggested that both the businesses should not be mixed.