decor decor
"No pressure, no diamonds."

-Thomas Carlyle

Baring Private Equity Partners Asia to Purchase Controlling Stake in Hexaware Technologies

martinwolf Transaction Analysis

Financial Overview:

  • Total Transaction Size: $266.6 M
  • Implied Enterprise Value: $549.0 M
  • Implied Enterprise Value / LTM Rev: 1.7x
  • Implied Enterprise Value / LTM EBITDA: 8.3x
Transaction Facts
  • Baring Private Equity Asia announced on August 23 that it signed a definitive agreement to acquire a 41.9% stake in Hexaware Technologies Limited (BSE:532129), with an additional open offer to acquire an additional 26% stake in Hexaware.
  • The total potential investment of more than $465 million will be the largest investment made by Baring Asia in India, and is one of the largest-ever foreign investments in the IT services sector in India.
Deal Highlights Surge in Indian Outsourcing
  • Buyout opportunities for private equity firms are very rare, and even more so in India. As a result, this deal highlights the surging interest in IT firms fueled by expectations of lucrative outsourcing contracts from global corporations trying to cut costs and focus more on their core businesses.
  • Furthermore, the transaction is evidence that Indian companies continue to hold a strong global competitive advantage in IT services, drawing continued interest by global investors.
Hexaware Can Scale

  • The Hexaware platform could be scaled rapidly with further capital. We believe Baring will seek to rapidly grow the company through acquisitions, allowing it to escape the problems facing other middle-market companies.
  • The transaction also clearly points to the prediction that Indian IT Services companies will benefit from a rise in technology spending as the U.S. economy improves.
More Market Specialization in India/Asia Moving Forward
  • While scale is important to all global IT outsourcing companies, Asian companies have new pressure to differentiate themselves from their competitors as overall market growth has slowed. The result is that middle-market IT services companies in India are being squeezed. Conversely, large companies can leverage their scale for advantages. Small companies can distinguish themselves by specializing to fill niches. Medium-sized companies face an increasingly inhospitable environment–without a unique market advantage they will be squeezed out or swallowed up through M&A.
  • This pressure on medium-sized companies is felt throughout Asia–during the last three quarters, at least five Chinese IT services companies, including iSoftStone, Pactera, AsiaInfo-Linkage, Camelot and Yucheng Technology have all announced receiving proposals from private equity firms, including Blackstone, to go private.
For more information, see the press release.
martinwolf was not the advisor in this transaction.
previous post Back to Articles next post

09 May 2023

DynamicsCon LIVE Conference Information

martinwolf will be attending the DynamicsCon LIVE conference in Scottsdale May 22-25. Book a confidential one-on-one meeting with Michael Rosholt to learn about market trends, current valuations, and how to prepare for a sale.    DynamicsCon attendees are also eligible for a complementary M&A Readiness Scorecard from martinwolf.   Contact Michael Rosholt at mrosholt@martinwolf.com to...

22 Feb 2023

How Microsoft Channel Partners Can Command High Valuations

In today’s rapidly changing ecosystem, simple organic growth doesn’t give Microsoft Channel Partners long-term competitive advantage.   During the last five years, Microsoft Channel Partners have commanded high valuations due to strong and sustainable business models, as well as a track record of profitability. Most were small mid-market businesses that had to decide to be...

31 Jan 2023

Rising Interest Rates Chill Private Equity Pace

After a year of strength on the private equity front, 2022 is now in the rearview mirror and industry professionals anticipate a downgrade in performance for the coming year.   Despite the fluctuations of the past few years, private equity has withstood the challenges relatively well. However, in certain areas such as exit activity and...