Why PE firms are crushing on smaller tech ventures
At least three experts connect this trend to higher growth expectations and to the simpler teams of smaller IT companies. Multinges invested $ 200 million to buy a control stake in QBurst in February, while the EQT acquired WSO2 in August last year. The EQT also acquired Indium in December 2023, and BLACKSTONE purchased a shareholder at R Systems in November 2022.
This bet on smaller technology service providers comes from India’s middle covers since the last two years have exceeded larger peers. Last year, IT external resource users, who earned less than $ 5 billion in annual income, increased double -digit compared to larger peers growing between 3% and 5%. Analysts tied this tendency to adoption faster and to more simple teams.
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Very alternative asset management Thiruvananthapuram centered QBurst Technologies Pvt. In February, LTD made 200 million dollars in the field of technology services of PE company. Mint 6 February Report. Mint He could not independently determine the share of PE’s floors in the software company.
“Mulhes has focused on technology services companies operating in high growth areas. Companies such as Cevik and agile Qurst can scalable new customers and expanding the services to existing customers.” Mint Thursday Survey.
“The PE company is at the board level and guides the general financial objectives and expectations. They also help to examine the new strategy and get the right series of external consultants and consultants to work with the new management team on the ongoing transformation.” He said. Mint Thursday.
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The PE company, which has a asset management of approximately $ 3 billion (AUM), is expected to focus on the corporate technology sector, which it plans to invest in approximately 2 billion dollars in the next five years.
Small large
“The company has rich capabilities in the value chain of digital product engineering and enables it to grow faster than the market without being restricted with old IT services offers,” Gaur said.
At least one analyst reiterated a similar perspective.
“With digital technologies that guide a structural change in the industry, PE companies see this as a great opportunity to redesign the work, operations and financial models of small and medium -sized IT services companies. Therefore, they make their investments in two floors because they believe that they can result in a great value of growth and growth.
EQT Partners made a similar investment in May last year. With an AUM of approximately 313 billion dollars, the Swedish private capital company acquired WSO2, a California -based software company, through the BARING Private Capital Fund. The purchase was completed in August.
“EQT’s participation gained significant acceleration to our growth strategy. Investments and partnerships helped us to scalaning both operational and geographically. We were able to accelerate the development of products especially in our Saas offers and expand in key markets such as North America, Europe, Middle East and Africa”. Mint Thursday Survey.
CT company, EQT’nin “does not direct daily decisions, but a drilling board for long -term thought,” he added. At this point, the company rejected the first public offering plans, but it was a possible result to be open to public.
However, this was not EQT’s first attempt. In December 2023, the Private Capital Company acquired majority shares in the Chennai -based digital engineering company Indium Software.
Supporting rapid growth
In a statement made on December 22, 2023, EQT will support the EQT in the next stage of growth by taking advantage of EQT’s global experience in technology services, EQT’s EQT’s EQT’s In -Company Digitalization capabilities and a global industrial experts’ investment, Eqt said in a statement on December 22, 2023.
PE companies focused on companies listed of similar sizes.
Blackstone, the world’s largest private capital company, invested 359 million dollars in November 2022 to acquire a majority stake in R Systems International Ltd.
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Delhi -based new digital engineering company LaLast year, 17.4 billion ($ 203 million) income increases by 3.4% compared to the previous year.
Each of the above mentioned IT companies has 1,000 to 5,000 employees.
A second expert attributed his PE bet to more lean teams and efficiency led by AI.
Pramod Gubbi, the founder of Marcellus Investment Managers, said, “PE firms prefer investments in smaller IT companies, because existence light, teams are more agile, capital return is good and more than four -fifth of revenues are repeating.” Gubbi, “complex, old structures do not have the scope of higher efficiency gains through AI,” he said.
A third specialist said that high PE investments focus on software products rather than ordinary back -end technology services.
Mumbai, an analyst on the condition of anonymity, “much smaller IT firms focus on software products. These companies have more income potential for these companies, and at the same time the asset is light, and there are fewer employees who provide more agility within the teams,” he said.
It is not the first time PE companies enter the sector for the first time. Blackstone invested in MPHASİS LTD in 2016 and currently has more than 40% shares in the seventh largest company in the country. The tenth Great Hexaware Technologies Ltd was purchased in 2021 by Carlyle Group for a value of $ 3 billion from EQT.
