3I infotech buys out stake in China JV

Mumbai
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Mumbai-based mid-cap IT firm 3i Infotech will buy the entire 49 percent stake of Elegon Infotech from Yucheng Technologies, its joint venture partner in China. Elegon Infotech will then become a wholly owned subsidiary of 3i Infotech.

3i Infotech had announced the formation of the JV earlier this year, which marked its foray into the Chinese market. The company had entered into a MoU with Yucheng Technologies for establishing a 51:49 JV.

“Yucheng wanted to concentrate on their core business. So, we have bought the 49 percent stake of the company. But they will continue to be our partners in China. Besides, some of the senior executives will continue to be with us,” said Amar Chintopanth, ED and CFO, 3i Infotech.

For 3i Infotech, its China operations are at a nascent stage, with about 80 people. “We have invested about $4-4.5 million (around Rs 195-210 crore) in the region. In the product business, we have been able to get a couple of small deals in the China market and we have a target to breakeven in this region by the end of this financial year,” added Chintopanth.

Weidong Hong, CEO, Yucheng Technologies, said: “Yucheng has been overextended and unable to allocate the resources necessary to promote each of our growth initiatives. By refocusing on our core competency in software & solutionn for the banking industry, we have a clear mandate from which to drive our business and financial growth.”

A Nasscom-McKinsey report ‘Perspective 2020’, said BRIC countries will open up additional opportunity of $380-420 billion by 2020. Almost 50 percent of this market will come from China.