Unable to find a suitable buyer for its portfolio investment in Infrasoft Technologies, Baring Private Equity Partners India has shelved plans to exit the firm. According to sources, the private equity firm, which invested around Rs 100 crore in 2007 for a majority stake in the Mumbai-headquartered software services company, will try and improve the firm’s business model.
Sources told FE that Baring India started reaching out to PE firms as well as a few large software services companies sometime last year. However, it is looking for a valuation of five times the initial investment, which it hasn’t been able to get so far.
Even the highest offer it has received is substantially lower, sources said. Moreover, while Baring is looking for a complete exit, potential buyers wanted the PE fund to remain invested as a minority shareholder, for some time, to ensure a smooth management transition.
With negotiations remaining unsuccessful, Baring India is now involved in the day-to-day running of the company. Infrasoft’s long-time MD and founder Hanuman Tripathi left the company in December last year, selling his 7% stake to Baring India. When contacted, Tripathi declined to comment. Company sources, however, said that while there had been no acrimony between Baring and Tripathi, there had been a mismatch in the expectations of the two. “One reason why the then Infrasoft Management decided to bring in Baring India as an investor was to be able to capitalise on Baring’s global portfolio of companies and its reach in overseas markets. However, that didn’t happen and Infrasoft remained a domestic market-focused company,” a former member of Infrasoft’s senior management who did not wish to be named told FE.
Infrasoft was one of the early entrants in solutions for anti-money laundering, capital markets, core banking and payment solutions, a market now dominated by bigger rivals. In the last fiscal the company clocked annual revenues of close to R225 crore and posted a 38% increase in profits.
Baring India has meanwhile exited two portfolio investments in the past two weeks in open-market transactions. In separate block deals it sold its holdings in FMCG majors Marico and Dabur to a Barclay’s Singapore entity.