 "Bain Capital, GIC, Advent invest $350 mn in QuEST Global")
QuEST Global, a pure-play engineering and R&D (research and development) services provider, on Thursday said leading global investors Bain Capital, GIC and Advent International had invested around $350 million (about Rs 2,396 crore) for a minority stake in the company in a deal valuing the company at around $1 billion (Rs 6,855 crore).
These investors have also bought out QuEST Global’s long-time investor Warburg Pincus, and a few other shareholders who had invested in the company at the angel stage.
Founded in 1997 by Ajit Prabhu and Aravind Melligeri, the company is one of the largest pure-play engineering services companies with an estimated revenues of around $385 million (Rs 2,637 crore).
It counts large global corporate such as GE, BMW, Pratt & Whitney, Rolls Royce, Boeing and Airbus as its customers, employs around 7,800 people globally, more than half located in India, mostly out of Bengaluru.
“This investment by three of the most respected global investors reflects the progress we are making,” said Ajit Prabhu, co-founder, Chairman and chief executive officer of QuEST. “It also crystallises the value we have created for our shareholders and employees who have placed their belief in us and partnered with us in this journey.”
Warburg Pincus’s association with QuEST dates back to 2010, when the private equity major invested $75 million in the company for a minority stake.
Again, it invested an undisclosed amount in a follow-up round in 2010, which took its stake to around 25 per cent. Since its inception, QuEST has succeeded in attracting global investors's interest. Another private equity player, Carlyle, which invested $6 million in QuEST in September 2003, exited in 2007 when the latter bought it out.
"QuEST has been in the business for around 18 years, and we are one of the fastest growing company, showing about 30 per cent compounded annual growth rate (CAGR) over the past 15 years. We have maintained our margins consistently, making sure that we have good cash flow," Rajendra Kumar Shreemal, chief financial officer of QuEST Global, told Business Standard.
"These are the factors that attracted many investors into our firm," he added.
For Bain Capital, this is said to be its second big investment in the information technology (IT) space in India after Genpact, the NYSE-listed business process outsourcing services company, in which it had invested around $1 billion in 2010 for a 30 per cent stake.
In December, Business Standard reported that Bain Capital was leading a race to buy out Warburg Pincus from QuEST in a secondary offering in a deal that valued QuEST at around $1.
"We are partnering with QuEST because of the differentiated business platform and distinctive culture of the company. QuEST has demonstrated the ability to scale accounts in a fragmented industry by becoming the core engineering partner to most of the top global firms in its target industries," said Pawan Singh, a managing director of Bain Capital Private Equity.
With the backing of globally-known PE players and investors, and driven by an organic and inorganic growth strategy, QuEST has now set a target to touch $1 billion in revenues by 2020. Raman Subramanian, senior vice-president, Strategic Initiatives & Marketing at QuEST, said while there are enough opportunities in the engineering services outsourcing space in all seven verticals the company focuses on, it is also looking at expanding vertical capabilities. A couple of areas where the company is planning to expand are industrial IoT (Internet of Things) and digitisation, he added.
Post the current investments, the promoters of the company including Prabhu and Melligeri holds around 65 of the company.
