BUSINESS

Canadian group in talks to acquire Indian rummy site Ace2Three

TAGs: Ace2Three, Head Infotech, India

A consortium of foreign funds led by a Canadian private equity fund is reportedly negotiating to acquire Head Infotech Pvt. Ltd., which operates Indian rummy website Ace2Three.com.

The deal will cost Clairvest Group Inc. and its foreign partners between INR590-650 crore (around US$90-100 million), according to GLaws.in’s Jay Sayta, quoting an Information Memorandum “that has been doing the rounds. In exchange, the consortium will gain close to 85 percent stake in Head Infotech.

The deal is expected to be announced “very soon,” according to the report.

The shares that the consortium will acquire will include those of Matrix Partners, Hyderabad-based entrepreneur Rajesh Agarwal and his family as well as other initial promoters. People familiar with the deal noted that Agarwal and his family have been “facing pressure from banks and other financCanadian group in talks to acquire Indian rummy site Ace2Threeial institutions to pay pending dues” in their other company, BS Limited.

Meanwhile, Deepak Gullapalli, founder and CEO of Head Infotech, is believed to keep “part of his close to 15 percent stake in the company.”

This isn’t the first time that Head Infotech had been in acquisition talks with Indian and international companies. India’s largest gaming and hospitality company Delta Corp negotiated a stock and cash deal worth close to $100 million in September 2016 to acquire Ace2Three. The deal, however, fell through after Delta Corp management voted against it on grounds that there were several risks and uncertainties involved in the online rummy business and the high valuation was not justified.

Ace2Three had been leading India’s online rummy market until last year, when Rummycircle took over the top spot, with Junglee Rummy emerging as a close competitor. Ace2Three’s revenues for the year ending March 2016 reached INR170 crore, while the company’s profit stood at around INR60 crore.

An investor who looked at acquiring Ace2Three told Sayta that Rummycircle is already “far ahead in terms of revenues and market share,” while Ace2Three continues to lag behind, although the rummy site remains to be the “number one in making investor pitches.”

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