TA Associates has taken a minority stake in Indian analytics firm Fractal Analytics for $25 million, according to a company statement.
The business provides data and analytics services mainly to customers based in the US, many of which are Fortune 500 companies. According to the firm, the business has tripled revenues over the past two years and the private equity investment will be used to fund global expansion plans.
“The reason India is a special place for this sort of business is the talent availability. India is producing several-fold the number of engineers and talent that the West is able to produce. [Fractal] now has 600 employees that are very high-end,” Naveen Wadhera, head of India at TA, told Private Equity International.
Various GPs and LPs have once again become bullish about India as many investors stepped back. “The issue is there has been too much capital,” David Seex, head of Asia Pacific private equity at Adveq told PEI earlier. “India is now becoming an interesting place to invest again in terms of capital supply and demand.”
However, despite the availability of good entrepreneurs and businesses, as well as the drop-off in competition from other private equity players, valuations remain between high single-digits to low double-digits in terms of EBITDA multiples, Wadhera added.
The number of firms we're competing against have come down, but I don't think the valuations have. The expectations on value, both from entrepreneurs and investments banks driving the process, have not reset despite the down-flow of capital.
Naveen Wadhera, India country head, TA Associates
“The number of firms we’re competing against have come down, but I don’t think the valuations have. The expectations on value, both from entrepreneurs and investment banks driving the process, have not reset, despite the down-flow of capital. But certainly where we used to see 15-20 firms looking at an asset [two years ago], now that number is more like five or seven of us looking at an investment seriously.”
TA Associates remains committed to India nonetheless. In 2013, the firm promoted Dhiraj Poddar to director from principal in its Mumbai office, effective from 1 January 2013. Poddar said at the time that the move signified a commitment to India from the firm despite widespread negative sentiment about private equity opportunities in the country.
Founded in 1968, TA Associates is a mid-market growth private equity firm that has raised $18 billion in capital since inception, according to PEI's Research & Analytics division. The firm has offices in Boston, Menlo Park, London, Mumbai and Hong Kong. Recent investments include a September 2012 acquisition of Hong Kong-based SpeedCast from Asia Satellite Telecommunications for $32 million.