Wipro to sell assets of Infocrossing

India's third biggest software exporter Wipro is evaluating options to sell data centres and other computer hardware assets of its US subsidiary Infocrossing to unlock value from what the company now calls 'non-core' business, people familiar with the discussions said last week. At least five persons, including officials and bankers, said Wipro has already received initial offers from several medium to large US telcos, and the company is deliberating to carve out five data centres owned by Infocrossing for a potential sale estimated to be worth anywhere between $300 million and $400 million. "This part of Infocrossing (data centres) is not a game changer we want over next three-five years," the first person said on conditions of anonymity because these discussions are at an early stage. The person also added that Citigroup is currently holding discussions with potential buyers. "Interests received so far are unsolicited. As of now there is more than one potential bidder," he added. When contacted, a Wipro spokesman declined to offer any comments as the company is in a silent period ahead of its earnings announcement next month. In August 2007, Wipro had acquired Infocrossing for $600 million, with then revenues of around $200 million. At that time, the company had plans to increase Infocrossing revenues five-fold to $1 billion by 2010. "There is a realisation now that customers do not make decisions based on whether a vendor owns data centres or not - a proposition clearly visible when Infocrossing was acquired," another person intimately familiar with Wipro's acquisition strategy said. Among domestic peers, Wipro has been most aggressive in pursuing and making acquisitions having bought some 28 firms across the businesses of technology, lighting and retail. In April this year, Wipro acquired oil and gas IT practice of US-headquartered SAIC for $150 million in an allcash deal. Infocrossing has been the biggest acquisition Wipro has made so far. Another person directly involved in these discussions ruled out complete sale of Infocrossing, which contributes revenues to Wipro from the lucrative healthcare business. Infocrossing counts Nestle, BP, Capital One and Best Buy among its top customers. "Nearly a third of Infocrossing revenues are from healthcare clients, a segment which remains big strategic play for Wipro," the third person, who is also familiar with the internal discussions, said. "The idea is more about unlocking value from non-strategic part than giving up the entire unit," he added. Infocrossing is headed by Martha Bejar who is the chairperson and CEO, and has around 1,000 staff in the US. While data centres are being considered non-core by outsourcing vendors, telecom firms such as AT&T and Verizon are increasing investments in such facilities to host and offer applications using the cloud computing model. According to US-based Datacenter Dynamics, companies in the US will invest nearly $9.5 billion next year in data centers. On its part, Wipro has been attempting to offer outsourcing services bundled with computer data centres with customers such as Citigroup. Last year, Wipro even acquired a Citigroup data center in Meerbusch, Germany. "The part of Infocrossing, which currently offers these integrated services, is not something that can be sold. Data centres in the US are being considered to be sold," the fourth person said requesting anonymity because Wipro has not officially mandated any investment banking firm for this sale.