Mumbai | Pune: Private equity groups Bain Capital, Carlyle and KKR are in the fray to acquire Hexaware Technologies for $2.5 billion from Baring Private Equity Asia in potentially the largest IT services buyout in the country. Financial investors are on the prowl for scaled technology sector assets to take advantage of rising corporate IT spending on cloud services across the US and Europe.
They are competing with French outsourcing company Teleperformance SE, owner of Intelenet, which has also been selected to initiate due diligence on the target before final binding bids due mid-August, said several people familiar with the matter. The shortlist has been whittled down from an initial field of over half-a-dozen suitors, including Brookfield, Advent International, Partners Group, Apax Partners, Rackspace Technology and Fujitsu.
Moving to Cloud
Baring Asia, KKR, Bain, Carlyle and Teleperformance declined to comment. Hexaware didn’t respond to queries.
After putting large-scale technology projects on hold in 2020, businesses worldwide switched to remote collaboration and other business continuity tools. Consulting firm Gartner expects IT spends to reach $4.1 trillion in 2021 alone, up 8.4% from 2020, leading to a resurgence in corporate IT growth.
The rebound to pre-pandemic spending levels won’t be spread evenly across industries, say experts. Banking, securities and insurance companies, which fared better during the crisis, are likely to boost IT spending faster than retailers and travel firms. Hexaware is looking to take advantage of this.
Building on Momentum
In the company’s fiscal year ended December 2020, banking and financial services were the biggest verticals, contributing about 38% of revenue, with clients including premier US banks such as Citi and Bank of America and mortgage firms like Freddie Mac and Fanny Mae.
The other significant contributors to the top line were healthcare and insurance (21%) and manufacturing and consumer (17%). Travel and transportation, the other major vertical, was badly hit by the pandemic.
Under the leadership of chief executive R Srikrishna, formerly of HCL Technologies, Hexaware was among the earliest homegrown technology services firms to make a pronounced move to the cloud.