ChrysCapital part exits Hexaware Technologies with around 3x returns
Private equity firm ChrysCapital has sold nearly half of its stake in Hexaware Technologies Ltd, which is being acquired by Baring Private Equity Asia, for around Rs 173 crore (around $26 million). The private equity firm, which held 9.59 per cent stake as of June 30, sold 4.54 per cent stake or nearly 13.6 million shares since August 30.
On Thursday, ChrysCapital sold 1.62 per cent stake or 4.86 million shares on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) as a part of the transaction.
While the shares were sold for Rs 126.51 per unit on BSE, they were sold for Rs 126.48 on NSE on Thursday. Hexaware scrip closed at Rs 126.25, down by 1.56 per cent on BSE with a market capitalisation of Rs 3,769.83 crore.
Between August 30 and September 3, ChrysCapital sold 2.92 per cent stake for Rs 112 crore at an average price of Rs 128.25 per unit.
The buyer of the shares is not known yet but is expected to be Baring Asia, which said in a separate disclosure that it has bought 4.14 per cent stake in Hexaware through a market purchase.
Clubbing its secondary market transaction with the deal struck with the promoters of Hexaware and PE firm General Atlantic, Baring Asia's stake is likely to reach 46 per cent even before the open offer.
ChrysCap's stake was seen as crucial for Baring Asia to get a majority stake in Hexaware, if the open offer was not a success. Previously, ChrysCap was reportedly looking at a higher price for its stake.
According to VCCircle estimates, ChrysCapital has made 2.4-3x returns on its five- to six-year-old investment in Hexaware. It still has little over 5 per cent stake in the information technology and business process outsourcing service provider.
ChrysCapital started picking up shares in mid-2007 and later averaged its investment cost in 2008. After taking into account a bonus issue in 2011, its average purchase cost is Rs 42 to Rs 53 per unit. ChrysCapital picked up shares for an investment of Rs 120 crore to Rs 150 crore.
The partial exit comes at a time when Hexaware is going through a change in ownership; new buyers are expected to make an open offer in October.
Baring Asia said last month that it will buy 27.7 per cent stake in the company from promoter group led by Atul Nishar and another 14.1 per cent stake from General Atlantic, aggregating to 41.8 per cent. Under the terms of the deal, Baring Asia will pay Nishar and General Atlantic Rs 126 or Rs 135 per share aggregating Rs 1,575–1,687 crore (approximately $242-260 million based on INR/USD rate of 65).
Baring Asia also said that its Rs 1,058 crore open offer for the acquisition of 26 per cent at Rs 135 per share for Hexaware is expected to open on October 18 and close on October 31, 2013. (for more on the deal click here)
ChrysCapital has invested in several information technology firms recently, which include KPIT Cummins Infosystems and Infotech Enterprises. In the past the firm has successfully invested in larger IT firms like Infosys and HCL Technologies.
(Edited by Joby Puthuparampil Johnson)