Private equity giant Baring Asia, which owns the software firm Hexaware Technologies, is set to pick the $3 billion offer from the Carlyle Group for the city-based company, according to a person with direct knowledge of the matter.
The Carlyle Group - the Washington-based multinational private equity, alternative asset management and financial services giant with over $260 billion in assets under management and specialising in private equity, real assets, and private credit - is set to pip bulge-bracket private equity giants such as Bain Capital, KKR & Co and the Paris-based outsourcer Teleperformance and is most likely to be the winner with around $3 billion bid.
All these bidders had submitted binding bids by mid-August. If the deal is materialised it will be the biggest deal in the domestic software services space.
"Baring is set to go with the Carlyle Group's $3 billion bid, as it's much higher than the other bids which are around $2.5 billion only," one of the investment bankers negotiating the deal and advising the sell-side told PTI on condition of anonymity, as the matter is private and yet to be completed.
The deal will be closed very soon, he added.
A Hexaware spokesperson refused to comment saying the matter is private.
A reply to an email sent to the Carlyle Asia headquarters Saturday is awaited.
It can be noted that the IT/BPO segment has already seen two big deal announcements in 2021. To unlock value for shareholders, Hinduja Global Solutions, the BPO arm of the Hinduja Group, had early this month announced sale of its healthcare services business to Barings Private Equity Asia for an enterprise value of $1.2 billion.
In late April, American PE giant Blackstone had committed to pump in an additional $2.8 billion to acquire a controlling stake in Mphasis along with Abu Dhabi Investment Authority, UC Investments and other long-term investors as co-investors.
Atul K Nishar, the founder and chairman, had launched Hexaware in 1990 in Mumbai and in 2013, sold majority stake to Baring PE Asia for Rs 1,687 crore with an open offer for another 26 per cent for another Rs 1,058 crore, totalling the deal at Rs 2,745 crore, and later fully exited the company but remains the chairman. By November, Baring picked 100 per cent in the company.
The deal with the Hong Kong-based Baring Private Equity Asia involved the promoters Atul Nishar (27.7 per cent stake) and GA Global Investments (14.1 per cent) selling their 41.8 per cent stake for Rs 1,687 crore and then the PE fund making make an open offer to pick up 26 per cent stake at Rs 135 per share or worth Rs 1,058 crore, making it the largest investment by Baring in the country.
After taking Hexaware private in November 2020, in late April this year, Baring put the company on the block.
Under the leadership of Nishar, Hexaware has grown into a multi-million dollar global software and BPO services corporation and was a publicly traded company.
An entrepreneur by nature, Nishar founded Aptech, a computer training company, in 1985 and grew it into a leading global IT training outfit with over 2,400 centres across 52 countries.
Late last month Baring had shortlisted from around 10 bids Carlyle, KKR, Bain and the French Teleperformance for Hexaware, whic provides automation, cloud and customer services-related technology to a wide range of industries, including finance, education, hospitality and manufacturing.
With 37 offices in over 30 countries and over 20,000 employees, its revenue grew 6.5 per cent in 2020 to $845 million, while operating profit jumped 24.4 per cent to $152 million.
Carlyle had earlier unsuccessfully pursued Mphasis, which finally went to Blackstone but fell through over a valuation mismatch.
Carlyle was very active in the country over the past 18 months, sewing up deals with the Piramal group, Bharti Airtel's data centre business, PNB Housing Finance and Sequent Scientific.
The Indian portfolio of Barings Asia includes firms such as Virtusa, Citius Tech, Coforge (erstwhile NIIT Technologies), CMS, AGS Health and RBS Bank.