French IT services giant Capgemini has raised around $570 million on Tuesday to part-finance its $4 billion deal to buy New Jersey-headquartered IGATE Corp.
Apax Partners-backed IGATE, which acquired Patni Computer four years ago, has a large chunk of its global operations based in India. It is the single-largest deal in the IT sector involving an India-related business.
The deal, which is subject to necessary approvals, is expected to close in the second half of 2015 and would give an exit to Apax Partners.
Apax had backed the firm for its acquisition of Patni and holds 28.91 per cent stake in the firm. It would get $1.15 billion in this exit.
Capgemini had earlier said it would finance the deal through a combination of cash and equity portion translating into a dilution not to exceed 6 per cent of Capgemini share capital and debt.
Capgemini said it raised the money through a private placement of 6.7 million new shares, representing 4.05 per cent of its share capital before the capital increase, at a subscription price of €75.50 per share.
Morgan Stanley and BNP Paribas were global co-ordinators, joint lead managers and joint bookrunners; Crédit Agricole CIB and HSBC acted as joint lead managers and joint bookrunners while Citigroup, CM-CIC Securities, Goldman Sachs and SMBC Nikko were co-lead managers.
IGATE generated $1.26 billion in revenue in 2014, a rise of 10.2 per cent over 2013. It had 19 per cent operating margin, much higher than that of Capgemini.
Bulk of its revenue comes from North America (79 per cent) followed by Europe (14 per cent) and the rest from Asia-Pacific. This would especially boost Capgemini's presence in North America.
Capgemini would now have an estimated $4 billion revenue in North America, making it the top market with approximately 30 per cent of the pro-forma combined revenues in 2015. An estimated 50,000 employees will be servicing Capgemini’s North American clients.
This transaction would push Capgemini's combined revenue to €12.5 billion in 2015 with double digit operating margin and around 190,000 employees.