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In Focus: Mantas Complies to i-flex

US acquisition will compliment Revelus in risk and compliance softwares

i-flex made the largest acquisition by any Indian software company when it acquired the US-based Mantas. i-flex, which is a global leader in the banking software industry, is unique as over half of its revenues come via product sales. Banks use Flexcube for core banking needs, while Reveleus is used in compliance and risk management.

At $122.6 million, Mantas bill for i-flex is not cheap considering that the target company had revenues of $35 million and operating income of $6.9 million for 12 months ended June, 2006. Mantas makes products used in risk and compliance areas. Its products address the regulatory requirements in anti-money laundering, trading and broker compliance areas, which will be complementary to Reveleus, and also cross-sell products across clients.

To fund this acquisition, i-flex will make a preferential allotment to its parent Oracle.

As a result, Oracle will increase its stake in the company from 52.5 per cent to 55.1 per cent. i-flex was originally promoted by Citigroup, which sold its stake to Oracle last year.

Though the company has the world's best-selling banking software, its revenues have grown at 40 per cent and 30 per cent in FY'05 and FY'06 over previous year, which is lower than the growth posted by several IT services companies. So, when the stock trades at 42 times the trailing earnings, it surely appears a bit expensive, but probably that's because Oracle's open offer of Rs 1,475 provides a floor to the stock.