Infosys has dropped plans to sell automation software company Panaya after failing to find a buyer for a year. Instead, the software services giant has started investing in the subsidiary, foreseeing the efficiency of the company in AI and automation strategy.
The Israel-based software company's products include change impact analysis, automated code remediation, collaborative test management and test-execution, and ALM acceleration. It runs on Amazon Elastic Compute Cloud.
As per analysts, Panaya was a good acquisition but the asset was never used by Infosys after the buyout because of the corporate governance fight between the former CEO Vishal Sikka and NR Narayana Murthy, Infosys founder. The firm, which was bought at Rs 1397 crore, was put on sale at Rs 589 crore, which was about 60 percent below valuation.
Infosys has appointed David Binny, former chief product officer of Panaya, as the subsidiary's CEO. The company has also appointed a global sales director and business development and regional sales managers.
"Panaya was a smart acquisition. They use math and science AI to find patterns to help with upgrades and migrations which revolutionised the ability to save money and improve efficiency. This improved testing," Ray Wang, CEO, Constellation Research, told the Economic Times.
The corporate governance fight created a negative impact on the brand value of Panaya, making it difficult for it to find a buyer even after the value of the asset was slashed. Taking advantage of the corporate fight, some buyers tried to beat the price down by raising concerns about the instability in the asset.
Trying to retain lost value
Infosys, at the moment, is trying to retain the lost value of the asset by investing and fitting it into Infosys' digital strategy. Panaya was on the verge of shut-down before Infosys announced the acquisition of the company for Rs 1397 crore. There was a massive fall in the value of the company in 2017 after whistleblowers alleged that the buyout was overvalued and top executives had a personal interest in acquiring the company.
The controversy created by the whistleblowers and the rift between Vishal Sikka and NR Narayana Murthy led to an unending tussle over issues of governance. This led to the resignation of Vishal Sikka and 10 other senior executives that Sikka had hired. The controversy also raised questions about the stability and the efficiency of Panaya, leading to a drastic fall in its value.