Clearwater Capital Partners has acquired 4.2% in Hyderabad-based managed IT services firm GSS America for Rs 8.9 crore ($2 million). IL&FS Private Equity-backed IT solutions firm GSS America, that raised around $10 million early this year, had few weeks ago said it is acquiring US-based firms in the IT infrastructure management space.

Clearwater, which mainly makes investments in small and medium-sized distressed companies in Asia (excluding Japan), acquired shares of GSS America at Rs 149.7 a piece in the open market, its 52 week low price. The share price of GSS America rose 5% on Thursday post the Clearwater transaction.

This is not the first India deal for the New York-based special situation hedge fund this year. It had increased its stake in Sayaji Hotels to 32.87% after converting foreign currency convertible bonds (FCCBs). Sayaji operates three properties in Vadodara, Indore and Pune. It has two subsidiaries, Barbeque Nation Hospitality and Malwa Hospitality.

Clearwater Capital also hiked its stake in Diamond Cables by purchasing 2.2% stake for around Rs 10 crore through the secondary market which took its total holding to 13.77%. Diamond Cables that has now renamed itself as Diamond Power Infrastructure Equipment, also counts among its investors KSK Emerging India Energy Pvt Ltd.

Clearwater had been quite active in India and other Asian markets having picked exposure in auto, manufacturing and engineering space. In November 2009, it had invested Rs 35 crore in Oricon Enterprises, a Mumbai-based manufacturer of packaging products.

GSS America, that raised around Rs 140 crore through a public float three years ago, had in January also taken board approval to raise as much as $75 million through various routes for funding acquisitions.

Besides IL&FS PE that owns 13.12% stake in the firm, AIM-listed Kubera Cross Border Fund also owns 7% in GSS America. Early this year, media house Bennett, Coleman & Co Ltd (BCCL) had sold some shares in its two-year-investment in GSS America at a loss.

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