Financial technology firm Polaris Financial Technology Ltd is looking at options to divest its shares in IdenTrust Inc, a digital identity authentication services provider, owing to security reasons raised by the US government. It had acquired 85 per cent stake in the San Fransico-based company in April 2011 with an investment of around $19 million (then currency rate around Rs 88 crore), to support its cloud based financial technology offerings.
The business of IdenTrust Inc is classified by the Committee for Foreign Investments in US (CFIUS) as critical to its security infrastructure, the company informed the exchange .
“The US government imposed that the company must be controlled by US entities only. Accordingly, the Board of Polaris has considered and approved the decision to enter into negotiations with interested parties in the US within the next 12 months,” said the announcement.
Natarajan Narayanaswamy, chief financial officer of Polaris Financial Technology Ltd said. “The divestment would depend on what the valuation would be, but if the valuation is good, we would divest the entire stake in IdenTrust,” he said.
He said they were not in a hurry to sell. IdenTrust has some of its offerings to the Department of Defence in the US.
It is to be noted that the security certification by IdenTrust was expected to support the company in its entry into the cloud computing space for financial technology solutions. The company had launched its Financial Technology (FT) Grid in August, 2011, for which the technology of IdenTrust supported for security.
...to allocate $100 mn for buyouts
Polaris Financial Technology Ltd is planning to allocate $100 million (around Rs 549.25 crore) to acquire two to three product companies in the next four years.
The company is looking at a new phase of growth, which it terms as Polaris 4.0, which would focus on doubling the current revenues in the next four years. As a part of this pursuit, the company would continue to identify its core assets that will contribute to fuel Polaris 4.0 growth. Inorganic growth strategy will play an important role, and be backed by rationalisation of existing portfolio between core and non-core assets.
Addressing the 19th annual general meeting, Arun Jain, chairman of Polaris Financial Technology Ltd, said, “The company is planning to allocate $100million to acquire 2-3 product companies during the said period.” It was also looking at identifying and divesting ‘non-core assets’ from within this portfolio within the next 12months.
In its earlier phases of growth, Polaris had focused on building up scale moving from big to bigger projects and later building a comprehensive range of intellectual property in the banking, financial services and insurance (BFSI) space and building its product business from nothing to $100 million plus in five years.
Beyond technical and process skills and expertise, the company would require creative professionals who would need to move from solution thinking to design thinking, he added.