MphasiS to buy AIG's India IT services unit

Source: Reuters
* AIG Systems Solutions has over 800 staff at two centres
* MphasiS shares rise more than 4 percent after announcement (Adds details, share price)

Indian software services firm MphasiS (MBFL.BO) said on Wednesday it would buy the India-based IT services and solutions arm of American International Group (AIG.N), as the bailed out U.S. insurer looks to sell some units. Financial details of the deal were not disclosed.

AIG Systems Solutions Private Ltd, which provides IT services to AIG companies worldwide, has more than 800 staff at its facilities in Indian cities of Chennai and Kolkata, MphasiS said in a statement.

Shares in MphasiS, majority owned by Electronic Data Systems Corp, a unit of Hewlett-Packard Co (HPQ.N), rose as much as 4.3 percent after the news in the weak main Mumbai market .BSESN.

The shares, however, gave up its gains later in the day on profit taking to drop 1.3 percent to 493.90 rupees by 0635 GMT, while the main market fell 1.9 percent.

MphasiS, which gets more than 39 percent of its revenue from its financial services and insurance industry clients, will be able to boost its offerings for the insurance sector with this acquisition, said a company statement.

AIG Systems offers services such as application development and maintenance, testing, product development and support, the statement said.

Indian outsourcing companies have been buying local IT services units of the global financial giants, who are reeling under the impact of the financial meltdown, to boost their service offerings and acquire new customers. In December, Wipro Ltd (WIPR.BO), India's third-ranked IT services firm, announced the acquisition of Citi Technology Services Ltd for $127 million, as the embattled Citigroup (C.N) looked to shed assets outside its core business. [ID:nBOM394322]

AIG, once the world's largest insurer, is also winding down some units and selling others to cut risky investments and raise cash to repay $80 billion in taxpayer loans.