The Hindu Business Line : General Atlantic to invest Rs 300 cr in Hexaware

Global private equity firm General Atlantic has agreed to invest Rs 300 crore in Hexaware Technologies Ltd in the form of equity and optionally convertible preference shares.

As per the agreement between the two companies, the allotment of shares to General Atlantic will amount to 14.99 per cent of the equity stake in Hexaware after conversion.

The deal yields a capitalisation of Rs 2,000 crore for Hexaware post investment.

GA will acquire 1.057 crore equity shares of Hexaware for Rs 150.2 crore and 1.056 million optionally convertible preference shares for Rs 150 crore.

The preference shares shall carry a coupon rate of 2.95 per cent for the first 18 months, said a statement from Hexaware.

In case the conversion option is not exercised, the shares shall carry a coupon rate of five per cent thereafter.

For Hexaware, this investment marks a fundamental shift in its growth strategy — the company which has until now shied away from inorganic growth is now ready to consider it.

(General Atlantic, which acquired a stake in Patni Computer Systems, is credited with playing a role in the latter's acquisition of US-based Cymbal Corporation).

Until recently, Hexaware wanted to grow only the organic way, said Mr Atul Nishar, Chairman, Hexaware Technologies. "GA's entry coincides with Hexaware's change of approach in this matter."

"Funding is not the main purpose of this placement," said Mr Nishar. " GA has an excellent network of relationships with investee companies. We hope to leverage this expertise to grow our business further."

GA's global footprint, particularly in the US, Germany, and China will be of key importance to Hexaware, said Mr Rusi Brij, Vice-Chairman and CEO, Hexaware Technologies.

Hexaware, in a statement, said it is confident about meeting its revenue guidance of $38.6 million (around Rs 173 crore) and net profit guidance of $5.4 million (Rs 24.3 crore) for the first quarter ending March 31, 2006.

In FY'05, Hexaware witnessed a growth of 43.6 per cent in yearly profits after tax, which stood at Rs 91.49 crore.

Hexaware will hold an Extraordinary General Meeting of the Members in Mumbai on April 13 to seek shareholders' approval for the transaction.

Citigroup Global Markets was Hexaware's financial advisor and Kanga & Co the legal counsel for the transaction.

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