In one of the country’s largest IT deals, private equity (PE) firm Baring Private Equity Asia has agreed to acquired a controlling 41.8% stake, or 12.5 crore shares, in mid-tier software firm Hexaware for Rs1,687 crore.
Baring will buy the stake in parts from promoter entities led by Hexaware chairman Atul Nishar (pictured) – he founded the company in 1990 – and General Atlantic Global Investments (GA).
Nishar-led promoter entities will sell a 27.7% stake while GA will offload a 14.1% stake at Rs126-135 per share aggregating up to Rs1,687 crore ($260 million, based on Rs/$ rate of 65.00). The higher price of Rs135 per share would be payable on Baring’s stake in Hexaware reaching 50% or above.
As per regulator Sebi’s norms, Baring will make open offer for an additional 26% stake at Rs135 aggregating Rs1,058 crore ($160 million).
The proposed transaction is expected to value Hexaware close to $700 million (over Rs4,200 crore), a 15-18% premium to Friday’s stock price of Rs120.75 in Mumbai.
The deal is likely to be closed by year-end, subject to regulatory approvals.
Nishar said, “Hexaware will remain a public company, and the management team led by P R Chandrasekar will continue.”
Jean Salata, CEO of Baring, said, “The total potential investment of over $465 million will be the largest investment made by Baring Asia in India.”
Dipen Shah of Kotak Securities said, “The buyout by a PE firm suggests an expectation of good returns in the next 3-5 years. This may also indicate more consolidation for smaller IT firms, going forward.”