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Baring Private Equity Asia Acquires Minority Stake in NIIT Technologies
martinwolf Transaction Analysis
- Enterprise Value $1.1 billion
- EV/LTM Revenue 2.3x
- EV/LTM EBITDA 12.5x
- Hong Kong-based Baring Private Equity Asia (BPEA) announced earlier this week that it will acquire a 30 percent stake in NIIT Technologies for $381 million, triggering an open offer to purchase up to an additional 26 percent of shares at INR 1,394 ($20.14) per share.
- Total potential ownership would equal 56 percent, or $709 million.
- The transaction values NIIT Technologies at $1.1 billion. The per share purchase price represents a premium of 5.9 percent over the company’s average 60-day share price prior to the announcement-though shares have fallen approximately 3 percent since the transaction was announced.
- The transaction multiples are in line with the IT Professional Services – India median multiples tracked in April’s edition of martinwolf Scoreboard, at 2.18x and 12.0x EV/Revenue and EV/EBITDA, respectively.
- The transaction buys out NIIT Technologies’ founder Rajendra Singh Pawar and promoters, but CEO Sudhir Singh will continue to run the company.
- Closing the Loop: This transaction completes a sale process that launched in the second half of 2018 and attracted interest from large global private equity firms including Bain Capital, Blackstone, Carlyle and others. News of BPEA’s interest was first reported in January with further details in March.
- Better for Baring: The acquisition of NIIT Technologies adds a second Indian IT services firm to BPEA’s portfolio after Hexaware, of which it controls over 60 percent. While initial rumors were that BPEA planned to combine the two companies, any consolidation has been ruled out for at least two years.Today, BPEA currently has over 30 portfolio companies active across Asia with sales of approximately $29.1 billion.
- History of Focused Performance: NIIT Technologies is today focused in three verticals – Insurance, Banking/Financial Services, and Travel total over 70 percent of revenue – and three core capabilities: data, cloud and automation. This has worked well – NIIT Technologies’ FY’18 PAT was up 12.1 percent with Q4 revenues increasing 4.3 percent. BPEA expects to continue this “3×3 Matrix” philosophy as it pursues future organic and inorganic growth.
- No Stranger to M&A: NIIT Technologies concurrently announced the acquisition of integration software provider WHISHWORKS, which will bolster the company’s MuleSoft capabilities, and the divestiture of its 88.99 percent share in GIS software provider ESRI. BPEA and NIIT Technologies are open to further M&A provided it fits into the “3×3 Matrix” strategy.
*Financial information pulled from FactSet
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.