Partners Group has agreed to acquire Indian IT services business CSS Corp in a $275 million secondary buyout, a source with direct knowledge of the matter confirmed to Private Equity International.
The firm is backing current management TG Ramesh and Sanjay Chakravarty to take the 70 percent stake owned by SAIF Partners, Goldman Sachs and Sierra Ventures, with Partners Group ultimately taking an 80 percent interest in the business.
Partners Group declined to comment on the deal.
There was a period of over-competitiveness for deals, high entry valuations and short diligence periods. We now see that era ending
Cyrus Driver, head of India at Partners Group, spoke to PEI earlier about the firm's confidence in the Indian market
The investment will be one of a handful of buyout deals completed in the Indian market. Both China and India have typically offered minority stakes only to private equity investors, which is at times problematic when it comes to making operational changes or exiting a business, as the entrepreneurs remain in control.
Nevertheless, there have been signs that this is changing in China, as many undervalued companies listed on US stock exchanges are offering buyout opportunities to private equity firms. In May, The Blackstone Group offered $662 million to privatise China-based Pactera Technology, just weeks after CITIC Capital completed a buyout of NASDAQ-listed AsiaInfo-Linkage in an $890 million deal.
In India there have been fewer signs buyouts will increase. However, with an uptick in secondary buyout transactions, this has gradually started to change. For example in April, Kohlberg Kravis Roberts acquired a controlling stake in Alliance Tire Group from Warburg Pincus for a reported $500 million, PEI reported earlier.
Moreover, Kedaara Capital, led by ex-Temasek executive Manish Kejriwal, is currently raising $500 million for its debut vehicle, which will focus solely on buyout opportunities in India. The firm has reportedly raised $325 million for the vehicle, which was launched last year.
While investor sentiment has remained generally low in India, Partners Group has expressed it is bullish about the market. Cyrus Driver, who joined the firm in May 2012 as its India head, told PEI earlier, “There was a period of over-competitiveness for deals, high entry valuations and short diligence periods. We now see that era ending.”