Coforge in the red

Coforge, earlier known as NIIT Technologies is among the top five losers on the BSE. Though the stock opened in the green and rose 1% to Rs.3147, it soon slipped into the red to Rs.2820, down 9.5% and now too far from its 10% LC of the day at Rs.2804.

The company yesterday announced that it is picking up controlling stake in SLK Global Solutions (“SLK Global”), a business process transformation enterprise offering BPM and digital solutions for the financial services industry. Based in North America, SLK’s largest customer is Fifth Third Bank, N. A., which is also a significant minority shareholder.

Coforge shall initially acquire 60% stake in SLK Global, with SLK Global’s founders completely exiting. Fifth Third Bank’s stake in the company will be reduced to 40% and shall continue at that level for the next 2 years. Coforge will acquire an additional 20% stake from Fifth Third Bank after the completion of 2 years.

As part of the transaction, Fifth Third Bank has committed to remaining a significant customer of SLK Global and has also committed a base volume over 5 years starting FY’22.

The transaction is being funded by Coforge with a combination of internal accruals and external borrowings. Post-closing, the key management personnel, excluding the founder-promoter, will stay on and contribute to its continued growth.

The company has called for a Board meet on 17th April to raise funds via private placement of NCDs.