News
Announcement Concerning Acquisition of Shares of Robosoft Technologies Private Limited, Making It as a Subsidiary
Aug 10, 2021
Today, TechnoPro Holdings, Inc. (“TechnoPro”) agreed to acquire 100 percent of the shares issued and outstanding of Robosoft Technologies Private Limited (“Robosoft” or “the Company”), an India-headquartered company delivering solution services in a digital sphere mainly to the clients in the United States, Japan and India, which will become a subsidiary of TechnoPro in the two phased transactions: 80% in the first tranche and remaining 20% in the second one approximately one year later (hereinafter referred to as the “Share Acquisition”).
1. Purpose of Share Acquisition
TechnoPro is to identify the digital solution delivery services to the clients in the developed countries utilizing overseas offshore hubs as one of the pillars of the growth strategy in its new medium-term management plan published on August 10, 2021. The purpose of the Share Acquisition is to promote this growth strategy by acquiring the Indian offshore core hub and the capability of technology and solution in a digital field.
Robosoft employs more than 800 engineers with a mission of “Simplifying Lives with Delightful Digital Experiences”, providing one-stop digital solutions such as digital advisory, UI/UX design, engineering services, analytics, middle/back-end development to customers located in the United States and Europe, Japan and India. The Company has accelerated its growth during these three years by succeeding in gaining major accounts in the United States and Japan, and realized the revenue growth of +89% YoY and the EBITDA growth of +165% YoY, with achieving the EBITDA margin of 40%, in the latest fiscal year. And it has offices in the United States and Japan as well and the revenues from the customers in both regions in the latest fiscal year accounted for c. 45% and c. 24% of the total respectively.
Robosoft especially has a reputation in offshore delivery with Design Thinking and UI/UX at its core, leveraging emerging digital technologies such as AI/ML, IoT, 5G and VR/AR, and has following strengths and track records:
- Design Thinking based advisory utilizing workshops and expertise in UI/UX design
- Strong technical capabilities across front-end, middle/back-end and analytics
- Agile and highly mature offshore delivery model
- Realization of DX at global companies of Media, BFSI and Retail/EC industries
TechnoPro intends to work in collaboration with Robosoft to generate synergy effects such as:
- Gaining and expanding customer base in Japan of Media, BFSI and Retail/EC industries utilizing the existing solutions of Robosoft
- Developing and providing TechnoPro’s customers such as manufacturers etc., with digital solutions combining Robosoft’s unique offerings of advisory and UI/UX design and TechnoPro’s existing technologies
- Leveraging Robosoft’s engineers at domestic on-site and offshore and nurturing TechnoPro’s engineers in a digital sphere, given the tight supply of digital savvy engineers in Japan
TechnoPro will continue realizing its sustainable growth and further value creation during the periods of the new medium-term management plan through the Share Acquisition.
2. Overview of the Company to Become a Subsidiary
(1) Company Name
Robosoft Technologies Private Limited
(2) Head Office
217, N.H. 66, Santhekatte, New Udupi, Udupi, Karnataka, India
(3) Representative Name and Title
Rohith Bhat, Managing Director
(4) Business Lines
Software development service
(5) Capital
INR 424,417,606.-
(6) Established
October 13, 2000
(7) Major Shareholders and Ownership Ratios*
Ascent Capital (37.3%), Kalaari Capital (27.0%), 15 individuals including promoters and executives of Robosoft (35.7%)
* Ownership Ratios mean the ratios of economic ownership after converting class shares to common shares.
(8) Relationship between TechnoPro and Robosoft
Not Applicable
(9) Robosoft Business Performance and Financial Condition for the Most-Recent Three Years
(INR millions [JPY millions], except per share data) Calculated at INR1 = JPY1.50
| Fiscal Year | March 2019 | March 2020年 | March 2021 |
|---|---|---|---|
| Net Assets | 463 [694] | 644 [966] | 1,094 [1,641] |
| Total Assets | 604 [906] | 836 [1,254] | 1,318 [1,977] |
| Net Sales | 750 [1,125] | 974 [1,461] | 1,840 [2,759] |
| EBITDA | 139 [209] | 278 [417] | 736 [1,103] |
| Income before Taxes | 121 [182] | 263 [394] | 706 [1,059] |
| Net Income | 95 [142] | 182 [274] | 494 [742] |
| Net Income per Share | 2.34 [3.50] | 4.49 [6.74] | 12.40 [18.60] |
3. Overview of Major Sellers
(a) Ascent Capital
| (1) Name | UNIT TRUST OF INDIA INVESTMENT ADVISORY SERVICES LTD A/C ASCENT INDIA FUND III | |
|---|---|---|
| (2) Location | No.01, Ali Asker Road, Bangalore - 560052, India | |
| (3) Basis for Formation | Ascent India Fund III is a scheme of ACA Private Equity Trust, a SEBI registered Venture Capital Fund | |
| (4) Purpose of Formation | Investment in start-ups and growth companies | |
| (5) Partnership Formation Date | November 4, 2008 | |
| (6) Total Fund Amount | Not disclosed pursuant to the seller’s request | |
| (7) Investors, Investment Ratio and Outline of Investors | Not disclosed pursuant to the seller’s request | |
| (8) Outline of General Partner | Name | Ascent Capital Advisors India Private Limited |
| Location | Bangalore, India | |
| Representative Name and Title | Deepak Gowda, Partner | |
| Business Operations | Management of investment | |
| Capital | Not disclosed pursuant to the seller’s request | |
| (9) Outline of Agent in Japan | Not Applicable | |
| (10) Relationship between TechnoPro and the Fund | Relationship with the Fund | Not Applicable |
| Relationship with the General Partner | Not Applicable | |
| Relationship with the Agent in Japan | Not Applicable | |
(b) Kalaari Capital
| (1) Name | KALAARI CAPITAL PARTNERS II, LLC | |
|---|---|---|
| (2) Location | Sanne House, Bank Street, TwentyEight, Cybercity, Ebene 72201, Mauritius | |
| (3) Basis for Formation | Private Company limited by shares, with limited life | |
| (4) Purpose of Formation | Acquisition of securities | |
| (5) Partnership Formation Date | July 8, 2011 | |
| (6) Total Fund Amount | Not disclosed pursuant to the seller’s request | |
| (7) Investors, Investment Ratio and Outline of Investors | Not disclosed pursuant to the seller’s request | |
| (8) Outline of General Partner | Name | Vani Kola, Rajesh Raju, Kumar Shiralagi |
| Location | Not disclosed pursuant to the seller’s request | |
| Representative Name and Title | Resmah Mandary, Director | |
| Business Operations | Management of investment | |
| Capital | Not disclosed pursuant to the seller’s request | |
| (9) Outline of Agent in Japan | Not Applicable | |
| (10) Relationship between TechnoPro and the Fund | Relationship with the Fund | Not Applicable |
| Relationship with the General Partner | Not Applicable | |
| Relationship with Agent in Japan | Not Applicable | |
- *The other sellers are 15 individuals living outside Japan and there is not any relationship between TechnoPro and them.
4. Number of Acquired Shares, Acquisition Cost, and Ownership Ratios Before and After Acquisition
| (1) No. of Shares Owned before Transfer | 0 shares |
|---|---|
(2) No. of Shares to be Acquired |
Common Shares: 21,858,994 shares Class A Shares: 11,602,477 shares Class B Shares: 8,928,703 shares |
| (3) Acquisition Cost (INR millions [JPY millions]) | Purchase price for Common and Class Shares of Robosoft (estimate)* : 8,000 [12,000] Due diligence and other fees (estimate): 50 [75] Total cost (estimate): 8,050 [12,075] * The estimated amount of the purchase price in the first tranche is approximately INR 5,800 million [JPY 8,700 million]. |
| (4) No. of Shares Owned after Transfer | Common Shares: 21,858,994 shares Class A Shares: 11,602,477 shares Class B Shares: 8,928,703 shares Number of voting rights: 39,881,969 (Ownership ratio: 100.0%) |
| (5) Purchase Price Calculation Method | Based on due diligence performed by outside experts (finance, tax, law and business), the above purchase price was assessed comprehensively according to the EBITDA multiple method, net cash balance and so forth, and agreed after prudent discussions with the sellers. Incidentally, 100% of the shares will be transferred in two phases and the share price in the first tranche (80%) is determined based on the EBITDA, net cash balance and so forth of the fiscal year ended March 2021, while the share price in the second tranche (remaining 20%) will be determined based on the EBITDA, net cash balance and so forth of the fiscal year ending March 2022. So the purchase price for the second tranche, which is part of the purchase price mentioned in above (3), is estimated by the financial forecast at present and the actual amount will be varied subject to the actual financial result. |
5. Schedule
| (1) Date of Resolution | August 10, 2021 |
|---|---|
| (2) Date of Execution of Share Purchase Agreement | August 10, 2021 |
| (3) Date of First Share Transfer (80% of ownership ratio) | Late August 2021 (scheduled) |
| (4) Date of Second Share Transfer (20% of ownership ratio) | July 2022 (scheduled) |
6. Future Outlook
The impact of the Share Acquisition on its consolidated financial performance for the fiscal year ending June 2022 is under review now. TechnoPro intends to make appropriate disclosures in accordance with the applicable rules of the Tokyo Stock Exchange once such details are determined.
(Note on translation)
This document is provided for informational purpose only. If there are any discrepancies between this and the original, the original Japanese document prevails.
Reference document
For further details, refer to the supplementary document at the link below
Robosoft Technologies Private Limited – Share Acquisition Supplementary Material