ITC Infotech has emerged as the frontrunner to acquire a majority stake in mid-tier IT services firm Happiest Minds Technologies, according to people familiar with the matter.
The contours of the deal, including the size of the stake, valuation, and transaction structure, are still being finalised.
Moneycontrol had first reported on January 29, citing sources, that Happiest Minds founder and executive chairman Ashok Soota is exploring a potential sale of his stake in the company. Soota currently holds over 32 percent in the IT services firm directly and more than 40 percent through other promoter holdings.
Ashok Soota Medical Research LLP holds about 11.8 percent stake in the company.
At the current market price of around Rs 403, 83-year-old IT industry veteran Soota's stake in the Bengaluru-based company is valued at roughly Rs 2,600 crore.
Any deal would first involve the acquisition of Soota's promoter stake, following which the buyer would be required under SEBI's takeover regulations to make a mandatory open offer to public shareholders.
Queries sent to Happiest Minds did not receive a response till the time of publication while ITC Infotech declined to comment.
Why the deal matters?
Meanwhile, if completed, the acquisition would mark ITC Infotech's biggest bet yet on expanding its digital engineering and AI-led technology services business. It would also significantly strengthen the company's presence in high-growth areas such as cloud, data, cybersecurity, and digital transformation while broadening its global client base.
In October 2024, ITC Infotech completed its acquisition of cloud services company Blazeclan Technologies for up to Rs 485 crore.
For Happiest Minds, the transaction would represent a change in control after more than a decade as an independent company. Founded by IT industry veteran Ashok Soota in 2011, the Bengaluru-headquartered company has built a niche in digital transformation services and counts enterprises across sectors among its customers.
Consolidation in IT industry
The potential deal comes at a time when consolidation is gathering pace in the IT services industry as companies look to add scale, deepen capabilities, in AI and digital engineering, and expand their customer portfolios amid slower discretionary technology spending.
Additionally, macro-economic uncertainty, high interest rates in the post-pandemic period, and tighter budgets are some of the headwinds faced by the industry. Concerns around software jobs following the emergence of generative AI in November 2022 have further exacerbated negative sentiment.
Last month, India’s eight-largest IT company Persistent Systems announced the acquisition of German digital engineering firm Nagarro for roughly $1.3 billion.
Coforge also acquired US-based AI and digital engineering firm Encora for $2.35 billion. Moneycontrol was first to report the acquisition.
Other notable moves include TCS acquiring Coastal Cloud, Infosys acquiring Optimum Healthcare IT, and Mphasis making key capability acquisitions to gain deeper domain expertise in the evolving AI era.
In the strategic sale, HCLTech bought about 11% in Sarvam AI, which was first reported by Moneycontrol.