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
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.