Baring Private Equity Partners Asia may buy IT services firm Hexaware Technologies for around $400 million.
Times of India reported that the IT deal could be the largest private equity deal in India’s $108 billion IT exports sector.
In 2011, $330 million funding from Apax Partners to iGate Corp for buying Patni Computer was one of the top IT deals in India.
Baring Asia is in talks to acquire 42 percent stake of promoter Atul Nishar family and private equity investor General Atlantic Partners.
The company will need to make mandatory open offer for an additional 26 percent shares.
The transaction is expected to value Hexaware closer to $700 million (Rs 4,300 crore) in market capitalization.
With Hexaware sitting on $93 million (Rs 590 crore) cash, the deal pegs the company’s enterprise valuation at over $600 million (Rs 3,700 crore), which is 7-8 times the projected operating profit in the current calendar.
Hexaware is India’s ninth largest IT exporter with annualized revenue of Rs 912 crore in calendar 2012, and projected sequential growth of 3.5-5.5 percent growth, significantly higher than industry median and its own performance in recent past.
Hexaware Technologies posted a 10 percent increase in net profit to Rs 97.9 crore in the June quarter from the year earlier. Revenue rose 7.3 percent to Rs 536.6 crore.
The company earlier said that revenue in the September quarter is likely to be between $98.1 million and $100 million, a 3.5-5.5 percent sequential growth.
The company added 14 clients in the second quarter and its head count stood at 8,700 on 30 June.
Baring is likely to buy Hexaware Technologies at a time when the software exporter is looking to acquire a company in the range of $40-60million. The last acquisition that the Mumbai-based software company made was in 2006, when it acquired the US-based FocusFrame for $34.3 million.
Japanese IT major NEC held talks for a possible acquisition of Hexaware last year but didn’t proceed to clinch it.
Earlier, Baring Asia explored a buyout of the telecom software company Subex.
In addition, it tried to join hands with Malaysian wealth fund Khazanah to acquire Aegis BPO owned by the Ruias of Essar.