Credit information services company Equifax Inc. (EFX) has recently made an announcement that it will be selling the APPRO loan origination software unit of Equifax Enabling Technologies LLC to an Italian credit reporting firm CRIF Corp for $72.4 million in cash.
The acquisition is expected to close by the end of April, although a significant impact on its earnings is not expected in fiscal year 2010. The company is planning to use the proceeds for general corporate purposes and to fund its long-term growth plan. The company is streamlining its operations, focusing on its core competency and concentrating on functions such as credit scoring, credit modeling services, decision making tools, fraud detection and consultancy services.
Equifax is well-positioned to benefit from its leadership in important markets, heightened consumer concern regarding identity theft and strength in international markets. While Equifax’s core business remains solid, the company is driving growth through new product launches and international expansion.
India is one of its main target markets. Consequently, the recent license from the apex Indian bank the “Reserve Bank of India ” (RBI) to start a credit information company in the country is encouraging. Equifax will form a joint venture with leading Indian banks like Bank of Baroda, Bank of India, Kotak Mahindra Prime, Religare Finvest, Sundaram Finance and Union Bank of India, and will cater to companies all over India. The country offers good growth potential for EFX, but pricing of its products and services remains a key issue to succeed in this market.
Equifax delivered decent fourth quarter results (see conference call transcript here), with EPS exceeding the Zacks Consensus Estimate. The company also provided respectable guidance for the first quarter. However, given the strong correlation to consumer and financial markets, as well as the company’s U.S. exposure, Equifax is only expected to see modest growth in the near term.