Tuesday, November 4
Wipro likely to buy Citi’s tech arm for $150 million
FINANCIALservices major Citigroup is once again in talks to sell its subsidiary, Citi Technology Services (CTS), formerly called Citos. Wipro is believed to be front-runner for the bank’s captive technology and infrastructure outsourcing arm. The deal size, pegged around $150 million, is likely to be announced by the end of third quarter, said a source. However, both the parties refused to comment. “We do not react to market rumours and speculations,” said a Wipro spokesperson in an email response. ET had reported on June 27 that Citi was in talks to sell CTS. The multinational technology vendor IBM, India’s largest IT exporter, TCS, and major IT firm Infosys were also believed to be in talks with Citi. However, Wipro is pursuing this more aggressively and had even concluded due diligence process of the firm last week. If this deal is concluded, it would be the second time that Citigroup, which is under pressure from mounting credit-related losses in the US, will sell part of its India back-office operations. In early October, it had sold its captive BPO Citigroup Global Services to TCS for $505 million. No investment bank is believed to have been appointed. “As the transaction size is small, the company has not hired an investment bank. But could be handling it internally,” said a banker. CTS, a 100% subsidiary of Citigroup, provides critical technology infrastructure support, development and deployment of strategic software applications in the BFSI domain. It provides application development, maintenance and testing support for credit cards, core banking, equities and treasury to Citi entities worldwide. It employs close to 2,500 people and has offices in Mumbai and Chennai. Acquisition of CTS will strengthen the infrastructure and facilities management business of Wipro. Acquisition of CTS would help Wipro bag Citigroup as a key client.