Apax buys stake in Indian IT player Zensar, Electra exits

Zensar provides software development services to large corporations, on site or from outsourcing centers in India. Controlled by RPG Enterprises - one of India's largest industrial conglomerates - the company has more than 8,000 employees and a presence in North America, Europe, the Middle East, South Africa, and Asia Pacific.

Electra originally invested $9 million in an unlisted subsidiary of a Mumbai-listed computer hardware manufacturer. In 2001, the parent closed down its operations and the unlisted subsidiary performed a reverse merger and was then renamed Zensar. Electra therefore owned shares in the listed entity. The business has seen significant organic and inorganic growth, having employed just 900 people in 1997.

The private equity firm was able to remain an investor for so long because of the nature of the ultimate shareholder - Electra Private Equity, an investment trust listed on the London Stock Exchange that has specialized in private equity for more than 25 years. Electra has a generated a 16x return on its investment, in US dollar terms, and an IRR of 18%.

Electra has been reducing its exposure to Asia for several years to reflect a change in investment strategy. The firm's regional portfolio has returned 5x the total cost of investments and only a couple of portfolio companies remain.

Apax has invested $2 billion in the business process outsourcing (BPO) space globally, and Zensar represents its sixth investment. It previously backed iGate in a $1.22 billion buyout of India's Patni Computer Systems in 2011, receiving $80 million in cash plus an equity stake in the business. This was exited earlier this year when Capgemini agreed to buy iGate for $4 billion, with Apax getting $1.12 billion for its 28.9% stake.

"Zensar is a leading business in the technology services space with differentiated capabilities in retail, manufacturing and Oracle [it provides Oracle enterprise solutions for insurance and retail], and we look forward to working alongside the company and RPG Group to drive transformational growth over our investment period," Shashank Singh, managing director and India head at Apax, said in a statement.

Zensar reported revenue of INR26.3 billion ($406.4 million) for the 2015 financial year, up 13.48% year-on-year. Net profit was up 11.41% at INR2.64 billion while EBITDA came to INR3.91 billion, a year-on-year gain of 9.36%.

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• Topics
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