At a time when overseas acquisitions by Indian information technology firms have become the order of the day, a deal in the opposite direction certainly calls for attention. According to an official statement released on Thursday, South Africa based global information and communication technology (ITC) group Datatec has acquired a 50.01 per cent stake in Indian ICT distribution company Inflow Technologies Private Ltd.

In the statement, Datatec said the remaining 49.99 percent stake in Inflow will be held by management and existing shareholders. The stake in Inflow, with its presence in nine key Indian cities, provides Datatec with an excellent entry point and initial footprint in India. Inflow also has operations in Sri Lanka and Singapore.
 
The announcement lifted Datatec shares 4.2 per cent to 28.50 rand by 0800 GMT, outperforming the JSE All Share index which was 1.3 per cent higher.

"India is a very large and fast growing market offering strong prospects in our sector with a lower cost of entry compared to many other developing markets and potentially higher returns and greater organic investment opportunities," Datatec CEO Jens Montanana, said in a statement.

"Our investment in Inflow is another important step in our international strategy to increase our exposure to the world's major emerging markets which has recently seen our presence grow in markets such as Africa, the Middle East, Turkey and Brazil," he added.

Datatec Finance Director, Ivan Dittrich, admitted it was a small deal but one of high strategic importance. He also described the Indian market as ''highly lucrative.''

He said that the deal with Inflow reinforces Datatec's expansion strategy to increase its presence to the world's major emerging markets and also predicted a doubling of Inflow's revenues in the next year and a half.

In the year to end-March, Inflow reported revenue of $32 million and has more than 130 employees. A much larger company, Datatec reported a 27 per cent increase in revenue to $4-billion last year.

Dittrich added that Datatec - which wants to expand in India, Mexico, and in South America - is not ruling out further acquisitions in India, but would focus on bedding down Inflow.

Inflow Technologies CEO Byju Pillai commented, "This investment along with access to global best practices of Datatec in value added distribution gives us greater ability to grow our market share, make alliances with new technology vendors and expand into new geographies."

Datatec - which provides IT networking, consulting and distribution services - primary units are Westcon, Logicalis and Analysys Mason. These businesses have operations in Africa, the UK, Germany, North America and Middle East.

Inflow is a value-added distributor focusing on technology enablement and distribution of security, storage and networking products, solutions and services. It has alliances with 22 global technology vendors. These include CheckPoint, Nokia, McAfee Ironport, Websense, Radware, NetApp and Quantum.