Baring Private Equity Asia has hiked its holding in Hexaware Technologies Ltd through open market share purchases which would ensure it gets a majority stake of the public-listed firm even if the open offer to the public fails to generate interest. It also means a higher payout for the promoter and the existing private equity investor of the information technology and business process outsourcing service provider.
In a disclosure, Baring PE Asia said its special purpose vehicles (SPVs) have raised their holding to 8.76 per cent in the company by purchasing shares from the market. Together with the 41.8 per cent stake being acquired from promoter Atul Nishar and existing investor General Atlantic, this would bring Baring Asia’s stake to 50.56 per cent.
Under the terms of the deal, Baring PE Asia will pay Nishar and General Atlantic Rs 126 or Rs 135 per share aggregating to Rs 1,575–Rs 1,687 crore (approximately $242-260 million based on INR/USD rate of 65). The higher price is to be paid if Baring PE Asia’s stake reaches 50 per cent or above in the transaction.
The SPVs through which Baring Asia is acquiring the stake are HT Global IT Solutions Holdings, Parel Investment Holdings and The Baring Asia Private Equity Fund V, LP.
The final transaction is yet to close and Baring PE Asia’s 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, 2013 and close on October 31.
Hexaware scrip closed at Rs 126.95 on Thursday, down 0.51 per cent on the Bombay Stock Exchange in a flat Mumbai market on Thursday.
Institutional shareholders who have sold their stake ahead of the open offer aiding Baring PE Asia’s move to secure a majority stake include ChrysCapital, which held a 10 per cent stake in the company when the transaction was announced. ChrysCap exited its holding pocketing 3x returns on its investment.
Other sellers who have offloaded their shares include Hexaware management, including CEO PR Chandrasekhar.
The development comes after fair trade watchdog Competition Commission of India (CCI) cleared Baring PE Asia’s proposed acquisition of controlling stake in Hexaware Technologies.
CCI said, “The proposed combination is not likely to have an appreciable adverse effect on competition in India and, therefore, the Commission hereby approves the proposed combination under the (Competition) Act.”
(Edited by Joby Puthuparampil Johnson)