Wipro Moving: Buys Edgile and gets back into Sensex

Wipro has announced plans to acquire Texas based Edgile for a consideration of $230 million. Edgile is an emerging player in the area of cybersecurity, which has assumed importance as more of business activities either go online or more of the data gets managed on the cloud.

Wipro sees Edgile as a logical fit into its risk consulting business, of which cybersecurity is an important part. Wipro has been looking to expand its presence in the higher margin strategic cybersecurity services business and this acquisition fits logically into the longer term plans of Wipro for this side of the business.

Edgile has a pedigree of 20 years and has been around since the elevated risk levels that the world saw post 9/11. Edgile is primarily focused on cybersecurity and risk management consulting services to corporates. Edgile currently employs over 182 personnel in its onsite business and had reported annual revenues of $44 million in year 2020.

Edgile is substantially owned by private equity (PE) investor, Abry Partners. Post this transaction, it is expected that Abry Partners will fully exit their stake in Edgile and that stake would be assumed by Wipro. For Wipro, this acquisition at $230 million will give them easy access to transformational cybersecurity for board level governance.

Wipro and Edgile plan to jointly develop “Wipro CyberTransform”. This will be an integrated and all-inclusive suite that will enhance and sharpen boardroom governance of cybersecurity risk. It will also bring about board level buy-in to make cybersecurity the core of top level strategy and decision making at organizations.

Digital transformation is now an inexorable journey but it highlights cyber risks to a great extent. For Wipro, the acquisition of Edgile is a continuation of its investment in this field. It may be recollected that earlier in 2021, Wipro had also acquired Australia based Ampion, a provider of cybersecurity services in Australia. Wipro had also bought the cybersecurity practice of Capco to give the company a major foothold in Europe.

Wipro also replaces Bajaj Auto in Sensex

Apart from emerging among the 12 most valuable companies in India, Wipro has other factors working in its favour. In its latest half yearly review of index components, the Sensex Review Committee decided to bring in Wipro into the Sensex in place of Bajaj Auto.

This inclusion is expected to result in passive ETF and index flows of $154 million into Wipro while it would result in outflows of $69 million from Bajaj Auto. For Wipro, this marks a comeback into the Sensex after 3 years since it was dropped in 2018 and replaced with HCL Technologies.