27 July 2005 Software maker Oracle looks to be extending its reach into specialist vertical market, following reports that it is set to take a controlling stake in banking software vendor I-flex Solutions.

According to reports in The Financial Times, financial services giant Citigroup, which owns a $43.1% stake of Indian-based I-flex, is looking to offload the software maker. Oracle has emerged as the favourite to clinch the deal.

The purchase price could top $650 million, and would mark a significant expansion of Oracle’s efforts to develop its expertise in vertical markets.

“Oracle has traditionally views business applications as horizontal markets,” explained David Mitchell, an analyst at research house Ovum. But earlier this year Oracle bought retail software maker Retek in a deal worth approximately $650 million.

Oracle’s strategic interest in financial services (especially banking), telecoms and retail indicate a move towards the most information intensive sectors which have the highest IT spend. “Without such vertical capability, Oracle will not be able to grow its applications business as well as it should,” added Mitchell.

I-flex was initially created as a unit with Citigroup, although it was also intended to find other customers and was eventually spun off. It now has over 4,700 employees operating from 14 development centres across India as well as centres in Singapore and New York.