Intel Capital has fully exited its decade-old investment in software development firm Persistent Systems with 6x returns, according to VCCircle estimates. The venture capital arm of Intel had, last year, made a part exit soon after Persistent listed on the bourses and had made a similar return for that tranche of shares.
On Wednesday, Intel 64 Operations sold the balance shares representing 2.29% stake for Rs 36 crore ($8.1 million), bulk of which was acquired by Reliance Capital (Equity Opportunities Fund).
Intel had originally invested $1 million in Persistent Systems in April 2000, through Intel 64 Fund – a $250 million venture fund created in 1999 by Intel along with Hewlett Packard and few others. Thereafter the fund was liquidated and shares of the Indian firm were divided among the investors. HP did not invest further in the company but Intel Capital, through a Mauritius arm, again bought shares in Persistent Systems in November 2005.
Intel Capital Mauritius had last year exited its holding of around half a million shares representing 1.37% stake between April-June quarter when shares were trading around Rs 400 a piece. The stock had made a successful debut in the bourses listing at a 29% premium at BSE over its issue price of Rs 310/share early last year.
Pune-based outsourced product development firm Persistent Systems had raised money through the public issue to raise cash for establishing development facilities, and procuring hardware.
The company is also backed by other VC firms including Norwest Venture Partners and Gabriel Venture Partners who together own over 18% stake. Norwest Venture Partners and Gabriel Venture Partners invested in November 2005 by way of cumulative optionally convertible preference shares or CCPS. Norwest paid Rs 63.1 crore while Gabriel paid Rs 22.7 crore for their share. The CCPS were duly converted into equity shares in September 2007. These two investors are sitting on unrealised gains of around 3.5x.
Established in 1990 by Dr Anand Deshpande, Persistent Systems Ltd provides outsourced software product development services to its clients. It employs over 4,400 people of which 3,500 are software engineers and has centres in Pune, Nagpur, Hyderabad, and Goa. It has recently struck a deal with US-based telecom giant Sprint Nextel Corp to address the rising demand for connectivity and managed services by Indian enterprises.