SAIF Partners increased stake to over 5 per cent stake in software development firm Persistent Systems Ltd through a series of block deals initiated last year. The venture and growth capital investor, which first picked up stake in December 2012, has acquired 5.33 per cent stake in the Pune-based company.
According to sources the stake has been built for approximately for $20 million (Rs 119 crore). This comes as other investors have also been buying into mid-market IT companies.
Shares of Persistent closed at Rs 504.5, down by 0.90 per cent on Monday, giving the company a market capitalisation of Rs 2,018 crore.
With this, SAIF Partners will become the second-largest institutional investor in Persistent after Reliance Equity Opportunities Fund, which held 6.07 per cent as of March 31, 2013. Other major shareholders include Smallcap World Fund Inc (5 per cent) and Gabriel Venture Partners II (4.86 per cent).
SAIF Partners picked up 2.8 per cent stake at Rs 490 per share in December from early backer Norwest Venture Partners, which exited the firm with 4-5x returns. Since then it has been adding up shares in smaller blocks, with the latest transaction on June 21 for 0.64 per cent stake.
SAIF Partners has previously invested in IT services firms like CSS Corp, Intelligroup and Mindtree. While it has successfully exited both Mindtree and Intelligroup, the PE firm is reportedly also finalising its exit from CSS Corp.
SAIF Partners has been active in the market by buying stakes in companies like Mindtree, Indian Hotels Company, Havells and Thermax in the past. Most recently, it picked up shares in steel product manufacturer Pennar Industries, financial services company Edelweiss, drug maker IPCA Laboratories and Blue Star Ltd, one of India's largest central air conditioning companies.
Persistent reported 29.4 per cent growth in income to Rs 1,294 crore in rupee terms while in dollars its income grew 14.7 per cent to $237.82 million. Profit after tax was up 32.3 per cent to Rs 187.6 crore.
Established in 1990 by Anand Deshpande, Persistent provides outsourced software development services to its clients. It had raised two rounds of venture funding in 2000 and 2005, and was listed in 2010. The company recently acquired the cloud platform of US firm Doyenz and NovaQuest, a product lifecycle management (PLM) and search-based technology solutions.
"Persistent’s expertise in this OPD space, along with long-term relationships and service offerings addressing each stage of the product development lifecycle starting from conceptualisation to design to development to implementation and finally maintenance will enable it to make most of this opportunity. We expect it to post a USD revenue CAGR of 16.5% over FY12‐14E," said an Edelweiss Capital note on the company dated January with target price of Rs 645.
(Edited by Joby Puthuparampil Johnson)