Race for Hexaware: 3 way race between Bain Capital, Carlyle

Yet another mega deal is brewing in the Indian IT sector as bulge bracket private equity firms Bain Capital & Carlyle and French IT outsourcing major Teleperformance SE have submitted binding bids to acquire Hexaware Technologies, multiple industry sources with knowledge of the matter told Moneycontrol.

The Mumbai-headquartered target firm is promoted by private equity firm Barings Private Equity Asia and had been delisted from the bourses in November, 2020. Analysts believe acquirers prefer private firms to avoid open offer obligations and other formalities that are linked to listed firms.

“Binding bids have been submitted by these 3 suitors. The Bain Capital team is aggressively looking at this opportunity and they are being seen as a front-runner for this deal ,” said one of the persons cited above.

Two other persons confirmed the above, adding that rival private equity firm KKR had dropped out of the race.

A fourth person told Moneycontrol that Hexaware was expecting a valuation of $2.5 bn to $3bn for the proposed sale.

All the four persons above spoke to Moneycontrol on the condition of anonymity.

Barings PE Asia , Bain Capital and Carlyle declined to comment in response to a query from Moneycontrol. We are awaiting responses from Teleperformance SE and Hexaware.

Barings Private Equity Asia acquired a controlling stake in IT services firm Hexaware in 2013 for around $420 million. The firm provides automation, cloud and customer services-related technology to multiple sectors including finance, education, hospitality and manufacturing.

According to its annual report, Hexaware has 37 offices in over 30 countries and its revenue grew 6.5 per cent year-on-year in 2020 to $845 million.

The Indian portfolio of Barings Private Equity Asia also includes firms like Virtusa, Citius Tech, Coforge ( formerly called NIIT Technologies), CMS, AGS Health and RBS Bank.

-2021: Year of big-bang it deals-
The IT/BPO segment has already seen two big deal announcements in 2021. As part of a strategic plan to unlock value for all shareholders , on August 9, Hinduja Global Solutions ( HGS), the BPO arm of diversified conglomerate Hinduja Group, announced the sale of its healthcare services business to Barings Private Equity Asia for an enterprise value of $1.2 bn.

Earlier on 26th April, Blackstone announced that it had committed upto $2.8bn to acquire a controlling stake in Mphasis, with ADIA, UC Investments and other long term investors as co-investors.

-Hexaware: A look at the suitors-
According to its website, the India portfolio of Bain Capital includes Axis Bank, pharma major Emcure, coal tar maker Himadri, JM Baxi Group & L&T Finance Holdings. The last big domestic transaction by Bain Capital was when it led a consortium which pumped in $1.8bn in Axis Bank in 2017.

On the other hand, a few months earlier, Carlyle had emerged as the lead contender to acquire Blackstone backed IT firm Mphasis, but the deal fell through over a valuation mismatch. The PE firm has been pretty active over the last 18 months, announcing deals with the Piramal group, Sequent Scientific , Bharti Airtel’s data centre business and PNB Housing Finance.

Teleperformance SE is a leading global group in digitally integrated business services and serves as a strategic partner to the world’s largest companies in many industries.

It offers a one office support services model combining three solution families: customer experience management, back-office services and business process knowledge service. The group’s 331,000 employees, based in 80 countries, support billions of connections every year in over 265 languages and 170 markets. Moneycontrol