Part­ners Group Looks to Exit CSS

Swiss PE fund ex­pects a val­u­a­tion of $400-450 mil­lion; sounds out Black­stone, Car­lyle, Apax Part­ners, TCS and In­fosys

The Economic Times - - Companies - In­du­lal.pm@ times­group.com

Mum­bai: Swiss pri­vate eq­uity fund Part­ners Group, which ac­quired the con­trol of IT ser­vices firm CSS Corp three years ago, has ini­ti­ated dis­cus­sions with po­ten­tial suit­ors to sell the com­pany in a deal valu­ing the In­dian out­sourcer nearly $400 -450 mil­lion.

Pre­lim­i­nary feel­ers have gone out to home­grown IT bell­wethers such as In­fosys and TCS and bul­ge­bracket pri­vate eq­uity funds, in­clud­ing the Black­stone Group, Car­lyle and Apax Part­ners.

A for­mal auc­tion process is yet to be­gin, sev­eral peo­ple familiar with the mat­ter told ET.

Baar, Switzer­land-head­quar­tered Part­ners Group, which has di­rect or in­di­rect in­vest­ments in over 6,000 com­pa­nies glob­ally and man­ages as­sets worth more than $30 bil­lion, ac­quired 80% stake in CSS Corp in 2013 for $270 mil­lion. Ace tech­nol­ogy en­tre­pre­neur San­jay Chakrabarty was the part­ner for the Swiss group in the deal.

“Yes, they have sent feel­ers and are test­ing the wa­ters. It’s in very ini­tial stages, but there is enough trac­tion to­wards IT ser­vices sec­tor, man­aged by a pro­fes­sional owner,” said one of the per­sons cited above.

CSS Corp pro­vides a range of ser­vices, in­clud­ing mo­bil­ity solu- tions, cloud en­able­ment, tech­ni­cal sup­port and re­mote in­fra­struc­ture and has rev­enues of about $250 mil­lion in FY15.

When con­tacted, Part­ners de­nied any such devel­op­ment. “Un­for­tu­nately these ru­mours are com­pletely un­founded. There’s no exit plan on the hori­zon and we have not ap­proached any of the firms or com­pa­nies men­tioned,” it said in an email re­sponse.

Black­stone, Car­lyle, Inof­sys and TCS de­clined to com­ment. CSS and Apax did not re­turn mail seek­ing com­ments till the time of go­ing to the press. San­jay Chakrabarty could not be con­tacted on his mo­bile. CSS Corp pro­vides tech­nol­ogy sup­port for en­ter­prise and con­sumer prod­ucts, manag­ing IT in­fra­struc­ture, and de­ploy­ing net­works. The com­pany has large de­liv­ery cen­tres in In­dia, the US, the Philip­pines, Poland, Mau­ri­tius, Costa Rica and China.

Founded in 1996 and head­quar­tered in San Jose, Cal­i­for­nia, CSS has ser­vice de­liv­ery cen­tres in 13 lo­ca­tions world­wide and a team of over 5,400 pro­fes­sion­als. It has over 140 clients, in­clud­ing For­tune 1000 en­ter­prises, its web­site showed. The com­pany is build­ing in­tel­lec­tual ca­pa­bil­ity in three ar­eas such as au­to­ma­tion of sup­port, pro­vid­ing vir­tual in­fra­struc­ture and ap­ply­ing an­a­lyt­ics pri­mar­ily on cus­tomer sup­port data. The com­pany is headed by Tiger Ramesh TG, who has co-founded the IT in­fra­struc­ture man­age­ment com­pany Ban­ga­lore Labs and went on to es­tab­lish Quin­tant Ser­vices along with Pha­neesh Murthy, for­mer CEO of iGate. Ramesh had built the BPO and BSP busi­nesses at Quin­tant, which was later ac­quired and in- tegrated with iGate.

The CSS’s ac­qui­si­tion was a man­age­ment buy­out, which was crafted by Tiger and San­jay Chakrabarty.

In­dia’s IT ser­vices sec­tor has been on the radar of big pri­vate eq­uity funds. Black­stone on Mon­day ac­quired a 60.5% stake in MPha­sis for $1 bil­lion. The US pri­vate eq­uity giant has in­vested $1.4 bil­lion in a span of seven months in In­dian tech­nol­ogy sec­tor.

Car­lyle also look­ing at con­trol­ling trans­ac­tions in the tech­nol­ogy space and has par­tic­i­pated in sev­eral pro­cesses. Apax, on the other hand, part­nered with iGate and ac­quired Patni Com­puter Sys­tems and sold it to Capegem­ini last year for $4.1 bil­lion, in what would be the big­gest pri­vate eq­uity ex­its in­volv­ing an In­dian com­pany.

For In­fosys and TCS, the trans­ac­tion would be a strate­gic fit. How­ever, both the com­pa­nies are very con­ser­va­tive in na­ture and is yet to see up to what ex­tent they will go in a com­pet­i­tive bid­ding process, one of the per­sons said.

Part­ners Group, that de­cided to strengthen its In­dia op­er­a­tions in 2012, hired Cyrus Driver, a for­mer manag­ing di­rec­tor at He­lix Part­ners and JPMor­gan’s pri­vate eq­uity fund. It plans to in­vest $1 bil­lion in In­dia over the next 3-5 years, its top of­fi­cials have told ET in Fe­bru­ary.

The fund has backed sev­eral re­gional and lo­cal pri­vate eq­uity and ven­ture cap­i­tal funds for over a decade as their in­vestor, or lim­ited part­ner, and has de­cided to take a di­rect bet in the game since 2012. It has de­ployed $800 mil­lion across three as­set classes of pri­vate eq­uity, real estate and in­fra­struc­ture. Part­ners has picked up a mi­nor­ity stake in ed­u­ca­tion com­pany Eurokids.

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