Apax to exit iGate as Capgemini agrees $4b acquisition
French IT services company Capgemini will pay $4 billion to acquire US and India-based technology and service provider iGate, facilitating a 3.7x exit for iGate's PE backer, Apax Partners.
Based on Capgemini's offer of $48 per share for all outstanding shares in iGate, Apax will receive $1.12 billion for its 28.9% stake.
Apax initially backed the company for its $1.22 billion buyout of India's Patni Computer Systems in 2011. Patni was subsequently privatized by iGate. The PE firm invested $330 million in iGate, receiving 330 million in convertible preference shares. These were converted into 21.7 million ordinary shares in November 2014, taking Apax's holding to 23.4 million shares. It also received $80 million in cash from iGate.
IGate was founded in 1996 by Indian-American entrepreneurs Ashok Trivedi and Sunil Wadhwani. The company provides business process outsourcing (BPO) services to companies worldwide. While it is headquartered in New Jersey, many of iGate's assets - principally its development centers and technical professionals - are located in India.
IGate's largest customer market in 2014 was North America, which accounted for 79% of revenue. Once combined with Capgemini, the company's largest area of operation will still be North America, with 30% of the group's combined revenues expected to come from that market in 2015.
In the release, Capgemini Chairman and CEO Paul Hermelin, said the acquisition will also "give to the Group's Indian operations a new scale," and allow it to compete with the best US and Indian companies.
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