Zensar Technologies divests non-core businesses

To sharpen focus on future growth, the RPG Group company will sell its Indian, Australian and Middle Eastern businesses, and invest in its core markets – U.S., Europe and South Africa.

Zensar Technologies, the IT arm of the $3-billion RPG Group has divested some of its businesses, which it perceives as 'non-core' to focus on more lucrative geographies and businesses around the world.

Zensar, which is headquartered in Pune and had a turnover of $482 million in FY2017-18, has entered into an agreement with First Tek Inc., a U.S.-based IT services and products company to divest its businesses in Australia, Middle East and India. This, according to the company, will help it focus and invest in its core markets of US, Europe and South Africa, which account for a bulk of its revenue at present. The India, Australia and Middle Eastern businesses represented around 1.73% of Zensar's consoldated turnover.

Equirus Capital advised Zensar as its merchant banker for the transaction.

According to Zensar's intimation to the bourses on Tueday, Zensar will receive an upfront payment of ₹8.45 crore for the sale, and another ₹8.45 crore contingent upon exchange rate fluctuations, closing conditions and payment milestones.

"Zensar is focussed on strengthening its key verticals of hi-tech manufacturing, retail, insurance in our core markets of US, Europe and South Africa," Sandeep Kishore, chief executive officer and managing director of Zensar said in a statement.

Ever since private equity firm Apax Partners acquired a 23.2% stake in Zensar in October 2015 and Kishore came on board as the company's new CEO in January 2016, the company has endeavored to pivot towards new-age digital businesses, which have been upending the fortunes of many legacy IT firms. The company's share of revenue from its digital business - comprising IT services offered to clients, which are centered around technologies like artificial intelligence, robotic process automation - has increased to aso much as 38.2% at the end of FY2018.

The current divestment of some of its businesses is a part of Kishore's previously articulated plan of divesting businesses and markets that don't hold much potential for the future.

Zensar's shares lost 4.93% on the BSE on Tuesday to close at ₹221.60 per share. The bourse's benchmark S and P BSE Sensex lost 0.37% to end at 36,444.64 points on the same day.