GE Capital’s private equity arm has started exiting its decade old investment in R Systems International Limited, a Noida-based information technology firm.
GE Capital Mauritius Equity Investment sold around 1.7 per cent stake in the company for Rs 2.53 crore in a bulk deal on Thursday. Another arm of GE, GE Strategic Investment India, also sold its 1.32 per cent stake during the last quarter.
R Systems’ scrip was quoting at Rs 114.9 on Friday, up 4.12 per cent in mid-day trades on BSE. While GE Strategic Investment India has completely exited, GE Capital Mauritius Equity still holds around a 3 per cent stake.
In 2002, R Systems merged with Indus Software Pvt ltd, a banking and finance software and services company which was backed by GE Capital and Intel Capital. The private equity investors got a stake in R Systems as a part of share swap in this transactions.
GE Capital Mauritius Equity was allotted 2.98 million share of Rs 2 each at Rs 115.42, pegging the valuation of its stake at Rs 34.42 crore. Another arm, GE Strategic Investment India, also picked up 445,000 warrants in the company convertible into one equity share of Rs 2 each.
R Systems was listed in 2006 where it raised over Rs 100 crore. GE Capital Mauritius Equity sold shares worth Rs 15 crore in the issue, bringing its stake down from 11.14 per cent to 4.41 per cent. Intel Capital also sold shares in the IPO and completely exited the firm through market sales in 2007.
R Systems reported 11.3 per cent fall in sales to Rs 290 crore for CY2010 with its net profit slipping over 40 per cent to Rs 17.2 crore.
“The company added 3 new accounts which can scale up significantly in future. However, lack of scale up in existing large accounts has kept revenues range-bound over the past 5 quarters. The revenue profile reflects the challenges associated with a project – based business,” said a Kotak Securities report on the company dated May 2011.
The company’s revenues are expected to get a boost from the acquisition of Computaris International, a software company engaged in the telecom sector, which it bought for $14 million in January this year. “We expect revenues to rise by about 37 per cent partly on the back of consolidation of Computaris. Margins are expected to fall marginally in CY11 as currency appreciation and salary increases set off productivity and revenue related gains,” added the Kotak report.
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