Global financial services giant Citigroup Inc on Tuesday sold its 100 per cent subsidiary Citi Technology Services Ltd to Wipro for $127 million. CTS is an India-based captive provider of information technology services and solutions to Citi entities worldwide.
As part of the transaction, an all-cash deal, Bangalore-headquartered Wipro and Citi will sign a master services agreement for the delivery of technology infrastructure services and application development and maintenance services for six years.
Under the agreement, Wipro will get at least $500 million as services revenue from Citi.
Citigroup Global Technology Head Jagdish Rao, based in New York, said at a press conference that this $500 million is a 'minimum commitment' and it could grow to 'twice as much' in six or seven years.
With two centres each in Mumbai and Chennai, CTS provides IT services to Citi and its affiliates around the world.
CTS's 1,650 employees, trained in Citi processes and technologies and servicing Citi businesses in more than 32 countries, will now come under the Wipro Technologies fold, the global IT services business arm of New York Stock Exchange-listed Wipro Ltd.
CTS clocked revenue of $53 million in the calendar year 2007 and the earning is expected to go up to $80 million in 2008.
Apart from competencies in TIS, CTS has expertise in ADM for cards, capital markets and corporate banking.
Wipro officials said the transaction strengthens the Bangalore-based company's relationship with Citi.
Rao denied that the sale was triggered by turmoil in financial services, saying Citigroup would have gone ahead with the deal irrespective of the situation.
Wipro Joint CEO (IT business and member of the board) Girish S Paranjpe said Citi has played a pioneering role in leveraging technology for banking, adding Wipro is pleased that its domain expertise and infrastructure management capabilities positioned it as Citigroup's partner of choice.
"This position has further strengthened with this strategic transaction," Paranjpe said.
The transaction is expected to close by March next year.
Wipro senior vice president (finance solutions) Soumitro Ghosh said: "Citi Technology Services team's expertise in addressing the risk and compliance issues for banking industry positions us well to offer similar scale and complexity of services to other leading banks in the United States and Europe."
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