U.S. private equity firm Carlyle-promoted Hexaware Technologies has filed draft papers with capital market regulator SEBI to raise ₹9,950 crore via initial public offering (IPO) route. This is touted to be India’s second-biggest issue this year and largest-ever in the IT services and enterprise tech segment. In June this year, Hyundai Motor India filed preliminary papers with SEBI for a ₹25,000 crore public offering, which is the country’s largest IPO after state-owned insurer LIC raised ₹20,557 crore in 2022. If successful, Hexaware's public issue would be the biggest in the country's IT services sector since Tata Consultancy Services' ₹4,700-crore IPO in 2004.
The IPO of the Mumbai-headquartered company is entirely an offer for sale (OFS) by promoter CA Magnum Holdings, part of Carlyle Group, according to the draft red herring prospectus (DRHP) filed with the regulator on September 6. Currently, CA Magnum Holdings owns 95.03% stake in the IT services company.
As the IPO is completely an OFS, all the capital proceeds will go directly to the selling shareholder, and the company will not receive any fund from it.
This would be the second time when Hexaware Technologies will list its shares on the domestic bourses. The IT services company went public in June 2002 and was delisted from the stock market in November 2020 at a price of ₹475 per share after the company's former promoter, Bearing Private Equity Asia, made the decision to take the company private.
In October 2021, the Carlyle Group acquired a 62% stake in Hexaware Technologies from Baring Private Equity Asia for nearly $3 billion and further raised the shareholding in the company to up to 95%.
Hexaware Technologies is a mid-sized IT service provider, which competes with listed entities such as Coforge, LTIMindtree, Mphasis, and Persistent System, operating in 28 countries with a team of 31,870 employees as of June 30, 2024. It has a global presence comprising 38 delivery centers supported by 16 offices spread across the Americas, Europe and Asia–Pacific region.
The company-led by CEO Srikrishna Ramakarthikeyan claims to be one of the fastest-growing technology services companies in India, with over $1,000 million in revenue from operations in each of the financial years 2023 and 2022, according to the Everest Report mentioned in the DRHP. “The revenue from operations grew at a CAGR of 13.7% (in dollar terms) from the financial year 2021 to the financial year 2023, while according to the Everest Report, the global outsourced IT-BP services industry grew at a CAGR of 7.3% during the same period,” it says in the DRHP.
For the six month ended June 30, 2024, Hexaware posted revenue from operations of ₹5,684.3 crore and that of profit stood at ₹553.6 crore. In the corresponding period of FY23, the revenue and profit was ₹5,112.6 crore and ₹509.2 crore, respectively. For the full financial year 2023, the top and bottom line was at ₹10,380.3 crore and ₹997.6 crore, respectively, as compared to ₹9,199.6 crore and ₹884.2 crore, respectively, in the previous fiscal.
The book running lead managers to the offer are Kotak Mahindra Capital Company, Citigroup Global Markets India, JP Morgan India, HSBC Securities and Capital Markets (India) and IIFL Securities Limited.
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