 "Shashank Singh")
Driving the next phase of private equity investments in Indian information technology (IT), Apax Partners snapped up product and development firm GlobalLogic in a deal said to be $420 million. This is Apax’s third acquisition in the country and comes after Apax-backed iGate acquired Patni Computer Systems in a $1.2 billion acquisition in January 2011. Shashank Singh, partner & managing director, and co-head of the India office at Apax Partners LLP, talks to Surabhi Agarwal about what makes the global private equity giant so positive about the country and this sector. Edited Excerpts:
Why did you decide to acquire GlobalLogic? How does it fit into your agenda?
As you know, through iGate and another transaction in Brazil called Tivit Technologies, Apax has a strategy in the services space. We are very positive in the IT outsourcing, business process outsourcing and IT services space. This is a sector that we have been pursuing. GlobalLogic is a provider of outsourced product development, also known as R&D services. If you look broadly across the world, there is a shortage of engineers and developers within traditional companies.
So, high quality software designers will flourish in such an environment as companies outsource their requirements to remain competitive. If we are right in this interpretation, then an investment in this space has a lot of structural tailwinds, multiple avenues for growth and will offer a clear potential for consolidation in the future. So, this is the sector of IT that we had identified sometime ago and were following and we wanted to buy the right company in this space. We got to know GlobalLogic two-three years ago and we really liked the management team, the market they were operating in and the brand they had built up.
How long did it take for you to close the acquisition from the first time you looked at them?
We have been following the company for several years, which is normal for us as we tend to follow industries and sub-sectors and companies for several years and engage with the management teams over a long period of time as you never know when an opportunity comes up for a transaction. If you know the company and the space well, you can move quickly when the transaction happens. At some point in time, the shareholders of this company wanted to take it public. But, the public market opened and shut, and those windows were not at all consistent. They did not find the right window and at that point, they decided to sell rather than take it public. So, we were able to move very quickly.
Do you have any plans to consolidate GlobalLogic's operations with iGate or find any synergies between the two companies?
These are totally independent investments.
Will there be any changes in the company's existing management structure?
No, it will be business as usual. The management stays. So, we are backing the current management team led by Shashank Samant who is an extremely impressive leader and has led the company well so far and we are looking forward to a long association with him.
What are the financial details of this transaction?
We are not disclosing any financial details around the deal.
Has this acquisition completed your IT portfolio or will you continue to look at more companies in this sector?
We look in all of our core sectors and technology and telecom is one of them. IT services, BPO etc are areas where we spend a lot of time in. So we see opportunities in all of our sectors right now. We had two investments in India, this is our third. We had Apollo Healthcare, iGate and now GlobalLogic.
Do you have an open purse string for India or some kind of a budget is set?
We have an open purse string and we believe that this is a great time to be investing in India, because valuations have obviously corrected and while growth has come down, it is reasonably attractive when compared to global growth rates.
