ClearTax buys GST filing unit of Karvy
Sale comes at a time when Karvy’s stock broking unit looks to sell assets to clear dues.
BENGALURU|MUMBAI: Online tax filing platform ClearTax has acquired the goods and services tax (GST) filing business of financial services firm Karvy for an undisclosed amount.
The deal has come at a time when Karvy’s stock broking unit is looking to sell assets and raise capital to clear dues to banks and investors. The all-cash deal will see ClearTax acquiring only the GST business of Karvy Data Management Services, including its around 200 enterprise customers and 25 employees, apart from the tech platform. The ownership of the entity will, however, continue to remain with the Karvy group of companies.
“We’re buying the tech assets, the employee assets and customer asset, but the entity will remain with them. It’s almost an arm’s length kind of transaction,” said Archit Gupta, CEO of Clear-Tax. “It made sense this way as we didn’t need another entity to take over their business.”
Gupta added that Karvy’s business will be absorbed into ClearTax’s and that the company was looking to drive consolidation in the space. Gaining access to Karvy’s customer base also comes at a time when ClearTax is looking to take advantage of the requirement for mandatory electronic invoicing for large enterprises from April 1.
The deal is expected to close in the next 60 days and would not be subject to any regulatory scrutiny since it is a separate entity from the one that has come under the regulatory scanner. Karvy Stock Broking, a separate entity under the same group, has been hauled up by the regulator for alleged misuse of client securities and failing to honour investor payouts.
The company is facing a Rs 678-crore shortfall in dues to banks and investors, and it had told markets regulator Securities and Exchange Board of India and the National Stock Exchange that it would clear the dues by March 2020.
ClearTax said the acquisition will help grow its base of 1,500 customers. Moreover, while Karvy was only providing its customers GST filing services, ClearTax can now tap them with its reconciliation and EWay bill solutions, apart from electronic invoicing. Gupta said that ClearTax was actively looking at more acquisitions to grow inorganically.
Source- Economic Times.
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