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ChrysCapital part exits Hexaware Technologies with around 3x returns

ChrysCap's stake sale comes as Baring Asia has bought 4.14 per cent stake in Hexaware from markets, inching closer to majority stake mark.

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)

Hexaware Technologies Ltd. is an information technology and business process outsourcing (BPO) services company. It offers support, integration, implementation and testing services across enterprise software systems. The firm also provides enterprise architecture consulting, process consulting, portfolio analysis, business process modeling, information technology services, application development, re-engineering, enterprise applications, product development and maintenance, testing and infrastructure management and business process outsourcing. It also offers enterprise solutions, quality assurance and testing services, business intelligence and analytics, microsoft technology services, legacy management and modernization, infrastructure management services, human capital management services, java technology services, mobility services, cloud services, business process services and user experience services. The firm caters to the requirements of banking and financial services, insurance, travel and transportation, healthcare and life sciences, manufacturing and consumer sectors. The company was incorporated in 1992 and is based in Mumbai, Maharashtra.

(ChrysCapital Management Company)

ChrysCapital Investment Advisors India Pvt. Ltd. (formerly known as Chrysalis Capital) is a private equity firm with $2.5 billion assets under management. It provides early stage, expansion, growth and buyout capital to listed and unlisted companies operating in India. The firm seeks to invest in consumer goods and business service, infrastructure, manufacturing, healthcare, pharmaceuticals and financial sectors. It typically invests between $30 million and $300 million in the companies with revenues ranging from $50 million to $1 billion. The company was founded in 1999 and is based in Port Louis, Mauritius with additional offices in Mumbai and New Delhi.