Baring Private Equity Asia has shortlisted candidates including French outsourcing company Teleperformance SE for the potential acquisition of Hexaware Technologies
- Baring Asia began the process of selling homegrown Hexaware Technologies six months ago when it took IT services firm private
- holding company of Baring Asia, HT Global IT Solutions, owns 92% in Hexaware Technologies
- IT spending is expected to reach $4.1 trillion in 2021 itself, up by 8.4% from the previous year
In what might be the largest IT services buyout deal in the country, private equity firm Bain Capital, Carlyle and KKR are in the race to acquire Hexaware Technologies for $2.5 billion from Baring Private Equity Asia. The companies are in the fray along with the French outsourcing company Teleperformance SE, which owns Intelenet, which was also shortlisted for the potential acquisition, will do its due diligence on the target before bids are due to be submitted mid-August, according to an Economic Times report.
Scaled technology sector assets are on investors’ radar owing to increasing corporate IT spending on cloud services across Europe and US.
The potential deal initially saw interest from Brookfield, Advent International, Partners Group, Apax Partners, Rackspace Technology and Fujitsu which was later reduced to a few players.
The Hong Kong-based Baring Asia began the sale process six months earlier after taking Hexaware Technologies private. It roped in Barclays and JP Morgan to find potential buyers. The holding company of Baring Asia, HT Global IT Solutions, owns 92% of the mid-tier IT services company. Minority shareholders hold the remaining shares.
In the fiscal year 2020, banking and financial services were the biggest verticals for the company contributing 38% of revenue to the company with clients such as Citi Bank and Bank of America, Freddic Mac and Fanny Mae. Insurance and healthcare which made up 21% were the other largest contributors; manufacturing made up 17% while travel and transportation were badly hit in the pandemic year.
According to Gartner, corporate IT growth is expected to emanate from IT spending which is expected to reach $4.1 trillion in 2021 itself, up by 8.4% from the previous year. Banking, securities and insurance companies, which fared better during the pandemic, are likely to see more IT spending as compared as the rebound to pre-pandemic levels is expected to spread unevenly across industries.
Hexaware Technologies, under R Srikrishna, was among the first Indian tech services firm to make a move to cloud. Srikrishna narrowed the focus to three to four key verticals and the top 20 clients. The company’s revenue grew 12.2% to Rs 6,262 crore from the previous year and by a CAGR of 15.4% in five years.
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