Wipro to sell hosted data centre business to US firm Ensono for $405 mn

Wipro, India's third largest IT services firm, has signed a definitive agreement to divest its hosted data centre business to Illinois-based hybrid IT services provider Ensono for $405 million (Rs 26.26 bn). The data centre business of the company consists of Wipro Data Centre and Cloud Services, Inc in the US and a portion of datacenter business in Germany and the UK.

As a part of this deal, the Bengaluru-headquartered company will transfer eight data centres and 900 employees including those who support the operations out of India, to Ensono.

The two firms have also signed an agreement to jointly address the hybrid IT requirements of Wipro’s new and existing customers. As part of this, Wipro has made an investment of $55 million (Rs 3.6 billion) in Ensono.

Hosted data centre services was one of the three businesses that Wipro had acquired back in 2007 through the acquisition of US-based Infocrossing Inc. for around $600 million (around Rs 24.3 billion that time). However, soon after the deal Wipro realized that data centre hosting is not its core focus area, thus had long been looking for opportunities to unlock its value.

The two other businesses -- Medicare and Medicaid -- that came along with Infocrossing have since been integrated into other Wipro businesses.

"With this divestment, Wipro is unlocking a significant value from its hosted data center services business to Ensono. It will help Wipro to focus on accelerating investments in the digital space,” the company said in the filing.

Wipro’s Datacentre services reported $241 million in revenue in FY17, about 2.9 per cent of the company’s overall revenues in the fiscal. The net worth of the business was Rs 24.26 billion, net of cash and debt, the company said.

“As we embrace our strategy of focusing on newer digital areas of spend, our strategic investment and partnership with Ensono will enable us to remain committed to meeting the hosted data center services requirements of our customers,” said Kiran Desai, Senior Vice President, Global Infrastructure Services at Wipro.

The partnership with Ensono, will give Wipro access to data centres across more geographies than it had with its own business, allowing it to provide more end-to-end solutions in the infrastructure space.

“This particular acquisition and partnership with Wipro substantially increases our ability to scale and service our growing client portfolio. We are increasing our geographic presence by expanding our data center operations in Germany, UK and the US, as well as establishing an operational presence in India,” said Jeff VonDeylen, CEO of Ensono.

Incorporated in August 2015, Ensono is engaged in providing mainframe and Hybrid IT services to mid to large enterprises across industries. The privately-held company which has offices in the UK, Poland and Germany apart from the US, reported $285 million in revenue in Calendar 2017, and employs around 1000 employees.

The acquisition, which is still subject to regulatory approvals, will be closed in the quarter ending June 2018.