After ushering $15-billion General Atlantic LLC (GA) to its closely held equity reserves, IBS Software is rearing up for a global acquisition spree. The deal emerged the biggest investment in the IT products segment in India, when the Greenwich-based GA bought $60 million preferential shares in the Kerala Technopark-based IBS early this week.
“The capital that GA brings in will be utilised to acquire more global firms,” according to VK Mathews, chairman and managing director, IBS. “By sparking off the inorganic growth engine, IBS targets to get $1 billion valuation in two years,” he told FE.
Mumbai-based Edelwiss Capital, famed to have engineered the recent Air Deccan-Kingfisher deal, played the financial cupid in this IT products investment plan too. The GA’s input is to go into IBS takeover kitty.
Takeovers are hardly new to IBS, which grew 600% in revenues in its 10-year lifespan. In the last five years, the company notched two major overseas purchases to its belt. The Kerala firm had bought Avient Technologies from UK-based Honeywell International and some assets of Virginia-based Discovery Travel System. IBS operates in aviation, travel, transportations and logistics verticals, investing enormous man-hours to developing IT products for global market.
What puzzles about the new investment is that for a private equity giant of GA’s size, the equity dilution effected in IBS is less than one-eighth, although the company is sending its man Abhay Havaldar to the IBS board. GA is billed among world’s top 20 private equity investment companies. And IBS had been known to be possessive about its nest-egg.
Asked if the GA rendezvous was more out of social-capital appetite rather than for resources, IBS chief did not fully decline the surmise. “With GA, the priority is to rub shoulders with global big names. Secondly, GA’s capital too is consumable.” In fact, IBS is hungry for more business offices worldwide and this would need a robust takeover budget for next fiscal.