Global private equity major Kohlberg Kravis Roberts & Co. (KKR) and Canada Pension Plan (CPP) Investment Board have bought out the remaining stake of Singapore-based Flextronics in the KKR-controlled telecom software solutions firm Aricent for $255 million. In 2006, KKR acquired a majority stake in Aricent for $900 million in the largest leveraged buyout in India.
Following this deal, which got concluded on September 16, 2009, KKR’s stake in the Delhi-based Aricent (formerly Flextronics Software Systems) now stands at 79%. The individual acquisition costs of KKR and CPP Investment Board were not disclosed. But, according to a report by the Economic Times, KKR has invested $175 million to raise its stake from 69% to 79% in Aricent.And, CPP Board has picked up 5% in Aricent for $80 million.
The other stakeholders in Aricent are Sequoia Capital and The Family Office, which own the remaining 16% equity. In 2008, KKR raised $35 million in Aricent along with Bahrain-based investor The Family Office, which put in $25 million for the company’s expansion plan, the report said.
With this latest deal, NASDAQ-listed Flextronics has pocketed $255 million by the sale of its equity investment and note receivable in Aricent. In a statement, Flextronics says, the move is part of its strategy to monetise non-core assets.
The $465-million Aricent started out its operations in the late 90s as Hughes Software, an arm of Hughes Electronics, which was later bought out by Flextronics International. In 2006, KKR acquired a majority stake in Aricent, which was hived off by Flextronics.
Commenting on the deal, KKR India CEO Sanjay Nayar said, in a statement, “Aricent has reported its highest annual revenue and continues to grow its customer base. This investment reflects our belief in the company at this very important time in the communications industry.” Aricent has over 550 customers and more than 8,000 employees in 33 offices worldwide.