EQT, PAG, Blackstone, CVC among global PEs evaluating $1 bn ValueLabs buyout

A potential deal would value the Hyderabad-based company at around $1 billion, underscoring the growth trend among major venture investors who view enterprise technology as a high-growth but stable sector.

“Due diligence is currently ongoing,” said one of the people with direct knowledge of the development, adding that the first round of bids would likely be made by the end of November.

Spherical PE firms are investing heavily in mid-sized information technology and enterprise technology services providers from India. “Apart from these four firms, there are other PE (private equity) firms and some large strategy firms that will look at this issue,” the first person cited above added. (Strategies in private equity parlance refer to strategic players making acquisitions in the same or adjacent industries.)

Investment bank Goldman Sachs is advising promoters on the sale. Economic Times It was reported in October.

“Supporters – The Donakanti Family will likely continue to retain a minority stake,” said the second person with knowledge of the deal.

There was no response to emailed queries to EQT, CVC and ValueLabs spokespeople. Spokespeople for Goldman Sachs, Blackstone and PAG declined to comment.

ValueLabs was founded in 1997 by Arjun Rao and his family members who are his current supporters. The agency artificial intelligence (AI) service provider currently has more than 7,000 engineers and serves more than 300 enterprise customers, according to its website. It competes with major IT services companies such as Infosys, Cognizant and Wipro, as well as AI-focused companies such as Fractal Analytics, Happiest Minds and Quantiphi. (Agent artificial intelligence systems are capable of making decisions without human intervention.)

It offers a variety of services such as product development, quality engineering, cybersecurity, data and analytics, and operates in sectors such as banking and financial services, healthcare, insurance and education, among others.

According to the latest available financial figures, ValueLabs reported standalone revenue of $74.1 million in fiscal 2024; this is a marginal decrease from $74.9 million in FY23. Its profits fell to $5.6 million in FY24 from $7.1 million a year earlier, according to data shared by Tracxn.

Indian The software services sector has witnessed the participation of private equity investors. Some of the industry deals include: EQT’s investment in Indium, an AI-focused digital engineering services company, and digital and IT services consultancy Perficient; TPG-backed digital service specialist Altitrik’s acquisition of technical service provider SLK Software; Brighton Park Capital’s investment in TheMathCompany, a data analytics and strategy company; among others.

Mint In July, tech services company Accion Labs Holdings reported that early investors TA Associates and True North were expecting an exit at a $1 billion valuation.