Private equity firm Bain Capital Partners, which manages a portfolio worth $65 billion, has agreed to buy around 30 per cent stake in the business process management and technology services company Genpact Ltd for $1 billion. The stake held by the existing investors of the company – General Atlantic and Oak Hill Capital – will be bought at $14.76 per share with an additional $2.24 per share of special dividend, the company has said in a release.
“Affiliates of Bain Capital Partners have agreed to purchase approximately 68 million common shares of Genpact from entities affiliated with General Atlantic (GA) and Oak Hill Capital Partners for approximately $1 billion,” the company said.
With this sale, the combined stake of GA and Oak Hill in the company will be reduced to around 10 per cent. The four board positions held by the representatives of GA and Oak Hill will now be replaced by those of Bain Capital. General Atlantic and Oak Hill have invested in the company for more than seven years.
NV Tyagarajan, president and CEO of Genpact, said, “Bain Capital has a long-term perspective which is critical to building value, particularly for a company like ours. We look forward to working with Bain Capital as we continue to make enterprises around the world run better by continuously improving their business processes, and run smarter through the innovative combination of technology, data analytics and process expertise, resulting in better business outcomes.”
Robert Scott will continue to serve as the chairman of the board at Genpact and NV Tyagarajan will continue to serve as the president and CEO.
As part of the transaction consistent with its long-term investment orientation, Bain Capital has agreed not to sell any Genpact share for a period of two-and-a-half years, subject to limited exceptions, and has also agreed to a customary standstill.
“Genpact has earned its leadership position by partnering with global companies to improve business outcomes. Its relentless focus on the client and moving up the value chain has resulted in impressive revenue and client growth since becoming a public company in 2007,” Bain Capital said.
Genpact delivers services from 18 countries around the world, including the US, with more than 3,000 employees.
The transaction is expected to close in 2012 and is subject to payment of special dividend, anti-trust and competition clearances, and other customary closing conditions.
Morgan Stanley and Citigroup acted as financial advisors to Genpact, and Cravath, Swaine & Moore LLP acted as legal counsel. J.P. Morgan was the financial advisor to Bain Capital, and Ropes & Gray LLP acted as legal advisor.
For the second quarter ended June 30, 2012, NYSE-listed Genpact’s revenues were up 17.6 per cent to $467.6 million from $397.6 million in the previous year. This income was primarily driven by growth in revenues from global clients. The company’s net income (profit after tax) was up and reached $62.79 million from $40.729 million for the same period.
Genpact’s shares closed at $17.42 a unit on the New York Stock Exchange on August 1.
(Edited by Sanghamitra Mandal)