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Sequoia Invests In Cognizant And Exits At 2.1X, All In 8 Months

26 August, 2009

It could be one of the fastest exits for a private equity firm in India. Sequoia Capital India, the venture and growth capital investment firm, invested about $25-30 million in Nasdaq-listed Cognizant Technology Solutions about eight months ago. Very recently, the fund exited the investment at 2.1x. The firm had picked up the stake through open market transactions for $25-30 million around eight months ago.

Cognizant is an information technology services and consulting company with headquarters in New Jersey, United States and with significant operations in Chennai, India.

Sequoia has been aggressively cherry picking stocks from open markets since the financial markets crashed post-Lehman Brothers bankruptcy. Since the revival earlier this year it has also started exiting some of these investments.

It invested $9.3 million in Hyderabad-based Nagarjuna Construction Co. Ltd, and exited the investment at $22.3 million in May. Sequoia’s managing director Sumir Chadha told Mint in June that the firm had invested in seven listed companies between October and February 2009, picking up stake from open markets.

But market revival has not stopped Sequoia from making new investments in the market. Earlier this month it picked up a 6.8% stake in KPO firm eClerx Services Ltd from markets for around Rs 43 crore. The firm has also picked a stake in Naukri.com.

Cognizant was initially a joint venture between Dun & Bradstreet (76%) and Satyam Computer Services Ltd. (24%), but became a 100% subsidiary of D&B Corp. It later became a division of the Cognizant Corporation, after the split-up of Dun & Bradstreet Corporation. Cognizant saw a

revenue growth of 32% in calendar year 2008 from $2.13 billion to $2.81 billion.


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6 Comments
Naren . 6 years ago

Which raises the question – Is Sequoia a VC Fund or a Hedge Fund? Looks great now that it has made such returns and I am sure they would be looking v.smart. But, is it possible to build a sustainable strategy of such opportunistic investments? Isn’t it better for them to stick to what they are meant to be doing, which is VC investing?

rajAT . 6 years ago

well said naren… thts nt there mandate ..

sachin . 6 years ago

so what’s the big deal here? so many people have made 2x, 3x, 4x returns in the last few months.. for a change, even i made money in markets.. i made 2x in HDIL.. agreed that sequoia has amongest the brightest guys but making 2x in last 8 months is no big deal.. this piece of news snippet is noise and not analysis/useful-data..

Yugal . 6 years ago

I think its a better strategy than sitting on cash waiting for markets to correct.

Ravi . 6 years ago

VC fund doesn’t mean that the investments can be done only in companies through private placements. The mandate is governed by the memorandum of the company, they are permitted to do such kind of investments till they have an approval from their fraternity. Further, this is one of the ways to increase the corpus of the fund and use it for further investments into start up/ growth phase companies and generate better than market returns for the investors…

Ravi . 6 years ago

VC fund doesn’t mean that the investments can be done only in companies through private placements. The mandate is governed by the memorandum of the company, they are permitted to do such kind of investments till they have an approval from their fraternity. Further, this is one of the ways to increase the corpus of the fund and use it for further investments into start up/ growth phase companies and generate better than market returns for the investors…

Sequoia Invests In Cognizant And Exits At 2.1X, All In 8 Months

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