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Smaller IT firms are the new darlings of PE firms

Livemint

Livemint · 1m ago

Smaller IT firms are the new darlings of PE firms

Private equity firms, including Blackstone, EQT, and Multiples, are increasingly investing in India's smaller IT services companies with under $250 million valuations. These companies are appealing due to their faster growth, lean operations, and product-focused strategies, boosted by AI and SaaS efficiencies. Recently, Multiples invested $200 million in QBurst, EQT acquired WSO2 and Indium, and Blackstone took a controlling stake in R Systems, reflecting growing interest in agile tech ventures.

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Global PE investors eye bigger pie of India’s software services sector

Economic Times

Economic Times · 1y ago

Global PE investors eye bigger pie of India’s software services sector

There is an increase in interest from global private equity firms in acquiring Indian IT and software services companies. This is due to a rise in growth capital investments in the IT sector by global PE funds. The number of PE firms holding majority stake in Indian IT services companies has doubled between 2019 and 2022. Inbound deals from global investors for Indian firms rose 35% in 2023, outpacing the previous year's growth rate. Indian IT firms are seen as valuable due to their growth performance and potential. The total value held by PE firms in the sector has quadrupled, reaching $55 billion today.

TCS, Infosys see slowdown in large accounts

Livemint

Livemint · 1m ago

TCS, Infosys see slowdown in large accounts

TCS and Infosys, two of India's largest IT services companies, have reported reduced business from major clients like Citigroup, Postbank (Deutsche Bank), and Daimler last fiscal year. This decline from large accounts reflects broader industry challenges, affecting smaller IT firms as well. The slowdown is attributed to rising global uncertainties, which are affecting growth prospects and opportunities for securing new mega deals.

GCCs, small companies see an opening in WFO rules

Economic Times

Economic Times · 2m ago

GCCs, small companies see an opening in WFO rules

Many employees at major IT services firms are seeking flexible work-from-office arrangements due to long commutes and personal responsibilities. This demand has led some to leave for smaller companies or GCCs offering remote or hybrid work models. While top firms like Infosys have adopted hybrid policies, there's heightened interest in flexible roles amid low salary hikes and WfO mandates. Smaller firms view this trend as an opportunity to attract experienced employees seeking work-life balance.

CEO says he tried to hire an AI researcher from Meta, and was told to 'come back to me when you have 10,000 H100 GPUs'

Business Insider

Business Insider · 1y ago

CEO says he tried to hire an AI researcher from Meta, and was told to 'come back to me when you have 10,000 H100 GPUs'

Recruiting AI talent proves to be a challenge for companies, as the demand for generative AI skills outpaces the available supply. Limited funding and chip shortages make it difficult for smaller firms like Perplexity, an AI-powered question-and-answer engine, to attract the necessary talent. Even if they manage to acquire the highly coveted Nvidia GPUs, the rapid pace of AI development means they are already behind the major tech companies. This makes it increasingly hard to secure AI talent in the future, as candidates prefer to work on the next-generation models rather than joining smaller firms.

Mega deals may halve at IT majors on client business rejig

Economic Times

Economic Times · 6m ago

Mega deals may halve at IT majors on client business rejig

India's leading IT firms may see a decline in mega deals (contracts over $500 million) as a share of new revenue by FY26. Currently constituting 55-65% of revenues, mega deals could stabilize at around 50%, while smaller deals gain prominence due to clients' preference for flexibility. This trend indicates a structural shift towards modular and outcome-driven engagements, as smaller deals allow quicker conversions and lower risks amidst moderate growth projections in the IT services market.

Apollo Global, ChrysCap, Apis chart nearly $200-mn PE exit

VCCircle

VCCircle · 1y ago

Apollo Global, ChrysCap, Apis chart nearly $200-mn PE exit

Private equity firms Apollo Global Management, ChrysCapital, and Apis Partners are planning to sell their stakes in an Indian company for an estimated $200 million. This move comes as the firms aim to take advantage of the bullish stock market and cash in their investments. The three firms are looking to monetize their holdings and exit the investment, most likely due to the favorable market conditions.

Japanese M&A interest makes a strong comeback in 2024

Livemint

Livemint · 7m ago

Japanese M&A interest makes a strong comeback in 2024

Japanese conglomerates and investment firms are increasingly investing in India, with a focus on financial services and new-age companies. Leading companies like Yes Bank and Avendus Capital Financial Services have attracted bids from large Japanese banks. Japanese trading firms Sumitomo Corp. and Marubeni Corp. are planning investments in renewable energy projects and industrial parks in India, respectively. Interest from Japanese firms in Indian transactions has grown this year, driven by factors such as access to high-growth markets and the attractiveness of India compared to China. Smaller firms, however, remain cautious due to past disputes and legal cases involving foreign investors in India.

Indian, global PE firms plan food service platforms, encircle QSR players

VCCircle

VCCircle · 11m ago

Indian, global PE firms plan food service platforms, encircle QSR players

Foreign and Indian private equity firms are considering creating separate food service platforms in India by approaching quick-service restaurant (QSR) brands in various categories. These firms are looking to invest in bigger QSR brands and are exploring opportunities in the country's food service industry.

Warburg, Kedaara line up benchmark-beating PE exit move

VCCircle

VCCircle · 1y ago

Warburg, Kedaara line up benchmark-beating PE exit move

Warburg Pincus and Kedaara, private equity firms, are expected to achieve impressive returns from their latest investment in India. Warburg Pincus, having completed several successful liquidity moves and generating $850 million from a previous portfolio company, is poised for another profitable exit. The firms are making a significant impact in the Indian market and are set to continue their successful streak.

Acquisitions on the horizon in real-money gaming sector

Livemint

Livemint · 1y ago

Acquisitions on the horizon in real-money gaming sector

India's real-money gaming industry is witnessing a wave of consolidation, with larger firms eyeing smaller startups to expand their user base and generate more revenue. Industry giants such as Games24x7 and Nazara Technologies believe that consolidation is inevitable, although finding startups with the right valuation is a challenge. Smaller ventures may be affected due to limited cash flow, making it logical for bigger companies to acquire them to help with infrastructure costs. The acquisitions are expected to occur in 2024, with around 20 startups currently considering offers. The recent implementation of a new tax regime has affected valuations, leading to cautious acquisition strategies. Despite this, companies and investors remain optimistic about the sector's growth and potential profitability.

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