Carlyle starts a new chapter with Newgen

Carlyle had first backed the company in 2004, paying $9.4 million for a 50% stake via its 2002 vintage Carlyle Asia Venture Partners II - a $250 million fund.

Over the holding period the company's revenue grew at a compound annual rate of 22.1%, while EBITDA increased by 20.6%. When the GP came to exit its enlarged 60% stake to Franklin Templeton Private Equity, Aureos South Asia Fund (now managed by The Abraaj Group) and ePlanet Capital seven years later, it was worth $22 million.

"We developed a close relationship with the company and the promoter, Prabhakar Ram, during the investment period and continued to keep in touch after exiting the investment," explains Shankar Narayanan, managing director at Carlyle India.

And so when the PE firm was given the opportunity to invest again, it could proceed with confidence. A stake of 54.85% has been acquired from the investors Carlyle exited the business to previously for $32.8 million. However, Newgen is a much-changed company.

Set up in 1996, it offers end-to-end publishing and technical services for books and journals, from content creation to marketing. The company has production centers in India, the UK and the US, and claims to work with some of the world's largest publishers, including Cambridge University Press, Columbia University Press, Chase Publishing and Harvard Business.

"Newgen's business is on a much stronger footing with a higher level of client engagement and stickiness driven by the breadth of its service offering, technology, and automation," says Narayanan. "It has consistently invested 3-5% of its annual revenues in building automated tools, plug-ins and building blocks so that customers can publish quicker, better and cheaper."

The focus is now on strengthening Newgen's business and broadening its product offering. This involves diversifying into businesses such as financial publishing via Spectra; digital marketing through ePagemaker; and bespoke publishing and documentation solutions via GPSL .

In much the same way as Carlyle helped expand Newgen during its initial ownership period, the PE firm will use global relationships cultivated through the OneCarlyle platform - the name for the GP's network of operating partners - to access other markets, raise funds and seek out possible acquisitions than can help fuel inorganic expansion.

"Publishing services are expected to consolidate over the next few years and Newgen will be a big beneficiary of this trend," says Narayanan "Historically, the company has consistently plugged capability gaps through acquisitions or seeding new offerings; it will be in a similar position to make strategic acquisitions to further accelerate its growth."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Buyouts
• South Asia
• Media
• Media
• The Carlyle Group
• India
• buyout