Persistent Systems Ltd. has announced a strategic acquisition of select assets from SoHo Dragon Inc., a New York-based software application development company, for a total consideration of $4.7 million. This move is expected to bolster Persistent’s position in the Banking, Financial Services, and Insurance (BFSI) vertical and strengthen its relationship with a key client in the sector.

The deal involves an upfront payment of $3.09 million, while the remaining $1.49 million will be contingent on meeting specific performance targets over the next three years. Additionally, a sum of $0.12 million has been allocated to retain key employees essential to the asset transfer process.

Importantly, this transaction is not a share acquisition but involves the purchase of select assets. The acquisition is expected to close within the next 4-8 weeks, subject to standard closing conditions. Persistent Systems anticipates that these newly acquired assets, which currently generate an annual revenue of $9.3 million, will help in consolidating its market position within the BFSI segment.

Founded in 2010, SoHo Dragon Inc. is renowned for its expertise in front office operations, data warehousing, and business intelligence. The assets acquired from the company will enhance Persistent’s capabilities in these areas, aligning with its long-term growth strategy in the BFSI sector.

Persistent Systems’ BFSI vertical contributes around 31% to its total revenue, and the company’s exposure to the US BFSI segment stands at 24%, as per data from a recent JPMorgan note. This acquisition is seen as a strategic step to expand Persistent’s footprint in the financial services sector, particularly in the US market.

The acquisition of SoHo Dragon's assets reflects Persistent Systems' broader strategy of leveraging strategic purchases to fuel growth and enhance service offerings. With the newly acquired assets, Persistent aims to deliver greater value to its BFSI clients through innovative solutions that cater to their needs in front-office operations and data-driven decision-making.

Shares of Persistent Systems have reacted positively to the acquisition news, closing 2% higher on Tuesday amidst strong buying interest in IT stocks. The stock has shown a 12% gain in the past month, trading near its recent highs of ₹5,333.

Persistent’s acquisition marks a continuation of its aggressive strategy to enhance its service portfolio, especially in sectors like BFSI, where it has built a strong foothold. With this deal, the company expects to deliver enhanced digital transformation services to its clients in the financial sector, which is witnessing increased demand for cutting-edge solutions in areas like data management and business intelligence.

The deal with SoHo Dragon is expected to open new avenues for Persistent Systems in the BFSI sector, as the company expands its digital capabilities. This acquisition aligns with Persistent’s focus on becoming a top-tier IT services provider for the global BFSI market.

For investors, this acquisition presents a promising opportunity as Persistent Systems strengthens its BFSI services and expands its global client base. The stock market has already responded positively, with Persistent’s shares rising by 2%, reflecting investor confidence in the company’s growth trajectory.

Persistent’s move to acquire assets from SoHo Dragon underscores the company’s intent to continue its aggressive growth strategy. By leveraging these new assets, Persistent is well-positioned to accelerate its revenue growth and capture a larger share of the global BFSI market.

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