BPEA EQT part-exits India's Coforge, realises $109m

The private equity firm sold 2.15m shares for INR 4,125 apiece, according to bulk trading data released by BSE. As of March, the disclosed promoter interest in Coforge was 18.4m shares or 30.16%. The company’s stock closed at INR 4,107.60 on May 4, which implies BPEA EQT’s remaining stake was worth approximately INR 66.8bn.

When BPEA EQT last announced a bulk trade in March 2022, it raised around INR 25.6bn, reducing its position to 24.4m shares, or 40.3%.

The private equity firm bought a 30% interest in Coforge – then known as NIIT Technologies – in 2019 for INR 26.3bn, taking out the promoter, management training services provider NIIT. It then made an open offer for an additional 26%, taking the total investment to INR 49bn. By the end of the year, BPEA EQT had committed around INR 61bn and accumulated a more than 70% position.

Since the start of 2020, Coforge’s stock price has increased 120%, largely consistent with gains in the broader IT services space as corporates responded to COVID-19 by increasing their technology spend and investing in work-from-home platforms. Nevertheless, Coforge acted quickly to diversify a customer base heavily populated by clients in pandemic-afflicted sectors.

“About 30% of the client base was in travel, tourism, and hospitality, and the rest was insurance, financial services, and a few other generic areas. They landed a large client during the downtown, so the financial services business grew 30-40% while travel contracted by 10%,” Jimmy Mahtani, a managing director at BPEA, told AVCJ in 2021.

The private equity firm started exiting its position in late 2020, selling INR 2.01bn in shares. A further two transactions in May 2021 netted approximately INR 16.2bn. By year-end, it held 30.4m shares, suggesting additional sales.

Coforge is a global digital services and solutions provider that enables the outsourcing and transformation of traditional business operations. Its competencies cover product engineering, digital integration and process automation, artificial intelligence-enabled big data analysis, and cloud and infrastructure management services.

Revenue for the 12 months ended March 2023 was INR 80.1bn, up from INR 64.3bn a year earlier. Over the same period, EBITDA rose from INR 11.2bn to INR 14.1bn and net profit increased from INR 6.6bn to INR 6.9bn.

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• Topics
• South Asia
• Open market
• Support services
• BPEA EQT
• IT services
• India