Sequoia makes headlines, exits Pangea3 to Reuters
Sequoia Capital has sold its Indian early-stage investee Pangea3, a legal process outsourcing (LPO) business, to media and information conglomerate Thomson Reuters, in a deal that local media estimate is worth anywhere between $40-100 million.
While the key players in the deal have not disclosed the pricing details, the estimated value of Pangea3 – regardless of the wide range of the appraisals – represents a high multiple of return for backers Sequoia and Glenrock Group LLC, a US-based special situation PE firm. Sequoia invested $7 million in 2007 and Glenrock $4 million in 2006, both taking a collective 50% ownership role in the company. Sequoia’s investment, led by the firm’s India MDs Sumir Chadha and Shailendra Singh, came as part of a Series C round that further resulted in Chadha taking a board role at Pangea3. Glenrock, meanwhile, claims to invest in undervalued developing-market assets, and its 2006 investment enabled the company to double its workforce in just a few months, Pangea3 co-CEO Sanjay Kamlani said at the time.
The services outsourcing sector in India has remained a booming segment, and this extends to LPO work. According to Pangea3’s buyer Thomson Reuters, India’s LPO marketplace is growing at more than 20% annually, and is projected to be worth more than $1 billion this year. Pangea3 specifically focuses on areas including litigation support and document review; patent and contract drafting; corporate governance and corporate secretarial work; and competitive intelligence and patent litigation.
“With overlays in key segments including our corporate general counsel, IP solutions, governance, risk and compliance and law firm businesses, we’re aligning ourselves more closely into general counsel and law firm workflows,” President and General Manager of Thomson Reuters’ Global Legal Solutions division Tony Abena said in a statement, noting that Pangea3 is a “perfect fit in our long-term growth strategy.”
Despite Sequoia’s active year in India, Pangea3’s sale to Reuters is classified as among the largest exits it has seen in 2010. In August, the firm agreed to sell half of its stake in Indian diagnostics specialist Dr. Lal PathLabs to US-based PE firm TA Associates, leaving both TA Associates and five-year investor Sequoia with 16% stakes a piece in the company, for a reported $35 million. Its investee SKS Microfinance also made a stellar public debut on the Bombay Stock Exchange in August – at 5.17% above its issue price –and has been pegged as one of the most anticipated IPOs of the year. Sequoia Capital led a $11.5 million investment round into SKS in April 2007.
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