Apax Closes India’s Largest Exit Deal, Acquires GlobalLogic

Global Logic

GlobalLogic, a small firm started by four IIT graduates was bought for a staggering price of $420 million by Apax Partners, a private equity giant. The deal is thought to be the biggest deal in India, in the exit category for a small group of venture capitalists in 2013.

Apax has a stake in India’s lucrative outsourcing industry

When Apax closed the deal with GlobalLogic, it bought a stake in the $108 billion worth outsourcing industry in India. This substantial deal was not the only one of consequence in the company’s history. Apax backed iGate Corporation in a deal to acquire Patni Computer for a cool $1.2 billion.

What is GlobalLogic?

Founded in 2001 and based in California, the company called IndusLogic was later renamed GlobalLogic .The Company GlobalLogic works on a typical hybrid business model utilized by most Indian technology entrepreneurs. The company was founded by Sanjay Singh, Rajul Garg, Manoj Agarwala and Tarun Upadhyay. The niche arena, i.e., development space and outsourced product development and research, that the company specializes in, translates into direct competition with Persistent Systems and Symphony Technology.

Despite having roots in California, the company has significant development centers in Ukraine, Argentina and India. The company is a veritable leader in the outsourced product development services arena. Shashank Singh, Managing Director with Apax Partners was quoted as saying, “This is an emerging sector which we were keen to invest in.” As is the norm, the financial nuances were not repeated to the press.

Why Invest in GlobalLogic?

The outsourcing firm was valued at nearly ten times its operating profit, the normal metric while valuing a Company. The sales for the company was reported to be hovering around $250 million, a significant number.

The existing investors with GlobalLogic might have pocketed nearly five times their investment with the acquisition of the Company. The known investors are New Atlantic Ventures, Goldman Sachs, Westbridge Capital, Sequoia Capital and New Enterprise Associates. Westbridge Capital is acknowledged as the largest known shareholder in the company GlobalLogic as it started investing as early as 2006.

The company had some IPO plans that were shelved and JP Morgan was appointed to find a buyer for the company. The deal was lucrative and minimally disruptive as the existing CEP, Shashank Samant would continue in his role as leader. The company will still operate as an individual entity with their 6,500 employees and there will be no merger as such with iGate.

Indian origin entrepreneurs making waves around the world

Apart from the largest deal in India, Indians have been consistently figuring in major deals across the world. These entrepreneurs have been creating major revenue flows for their investors. Some of the deals spoken about with regard to Indian involvement are, Cisco’s million dollar acquisition of Meraki, Google’s acquisition of Flutter, a gesture recognition software startup and Staples acquisition of Runa, an ecommerce personalization company co-founded by Ashok Narasimhan.

Ibibo, a sister concern of South Africa’s Naspers, recently acquired Redbus, an online bus ticketing service chaired by Charan Padmaraju and Phanindra Sama. With such lucrative deals being made around the world by Indian origin entrepreneurs, one has to question if we are taking over the world of technology and outsourcing.

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