In its largest investment in mainland China to date, Computer Associates International Inc. Friday agreed to take a US$40 million stake in one of mainland China's largest software companies, Neusoft Group Ltd.
Based in the northern Chinese city of Shenyang, Neusoft offers an array of industry-specific applications, with a portfolio of products used by companies in the telecommunication, finance, insurance and power generation industries that CA hopes to offer its international customers.
The investment gives the Islandia, New York-based software company a presence on Neusoft's board of directors along with a "very significant" stake in the company, said Jianbing Duan, CA's senior vice president for Asia, adding that CA Chairman Charles Wang will join Neusoft's board.
Duan declined to reveal additional specifics of the deal, including the percentage terms of CA's stake in Neusoft or the number of seats it will get on Neusoft's board, saying that the companies would reveal more once the Chinese government grants its final approval of the deal.
Neusoft plans to use CA's $40 million investment to further development of its products and explore new areas of technology, said Neusoft Chairman and Chief Executive Officer (CEO) Liu Jiren.
The tie-up is also expected to help drive sales of Neusoft's products overseas and broaden the range of software applications CA can offer its customers. In particular, the emergence of China as the world's largest mobile telecommunication market will help generate international demand for Neusoft's telecommunication-related products, Liu said.
"CA is a very good channel for us," Liu said.
Under the terms of the agreement, CA will help distribute Neusoft's software internationally, starting in Asia and then expanding further abroad, Duan said, adding that specific details, such as branding, remained to be ironed out. "We're going to use Asia as a testing ground," he said.
In addition, Neusoft will integrate products that it currently has under development, as well as future generations of its software, with several CA products, including its Unicenter management application, Jasmineii application server and eTrust security software, Duan said. The companies are also looking at ways to work together more closely in mainland China, including cooperation in the areas of sales and support, he added.
"This agreement is just the beginning of cooperation between us (and CA)," Liu said.