Global financial institution State Street Corporation is set to acquire the entire 49% equity stake held by HCL Investments UK Ltd in their joint venture State Street HCL Services, HCL Technologies (HCLTech) said on Monday (December 4). The joint venture, established in 2012, was dedicated to providing business operations services.
HCL UK, a step-down wholly-owned subsidiary of HCL Technologies, entered into a memorandum of understanding (MoU) with its JV partner, State Street International Holdings, a US corporation, to discuss the modalities for State Street to exercise its right of call option in the JV.
The equity divestment is a result of the call option agreed upon in the initial formation agreement between the two parties, the IT services company said in a regulatory filing. The deal is worth $170 million plus the net book value on the date closing. The consideration includes amounts for transfer of shares and other components, HCLTech said.
While the exercise of the call option and the overall consideration for the transaction have been agreed upon, specific modalities and other terms and conditions are yet to be finalised, and discussions are ongoing. The completion of the transaction is anticipated in the second calendar quarter of 2024.
This move aligns with State Street's broader strategy of simplifying its global operating model and enhancing its operational efficiency. The consolidation of the joint venture's operations is expected to facilitate faster decision-making and create a more effective and efficient experience for State Street's clients.
The collaboration between State Street and HCLTech has spanned over a decade, evolving into a valuable servicing and operational centre. State Street has recently demonstrated its commitment to its Indian operations by acquiring full ownership of another joint venture in October 2023.
The consolidation of the Statestreet HCL Services capabilities and expertise in-house is poised to strengthen the former’s presence in India, reflecting a continued commitment to optimising its operations and enhancing client services in the dynamic financial services landscape.
Shares of HCL Technologies Ltd ended at ₹1,335.00, up by ₹1, or 0.075%, on the BSE.
