Apax Partners eye stake in Subex

Subex planning fund raise to retire FCCB debt

Apax Partners, the London-headquartered global private equity major, is understood to be looking at a $60 million private equity investment in Bangalore-based publicly held telecommunication software products company Subex Limited.

According to investment bankers close to Subex, the company is close to raising a “large private equity round” pretty soon, which will in a major way settle the FCCB (foreign currency convertible bonds) outstanding which Subex has on its books. According to the management of Subex, they have a total of $94 million FCCB outstanding at the moment.

There are two tranches of FCCBs outstanding at this point in time for Subex – one is $39 million in face value and the second tranche is of $55 million in face value, totaling $94 million. According to investment bankers close to Subex, the company is in advanced stages of the PE infusion to settle the first tranche of the outstanding. Subhash Menon, founder & chairman of Subex Limited did confirm that they are looking at options at raising funds but declined the quantum as well as the instrument which he will use.

As far as the second tranche is concerned, Subex is understood to have come to an agreement with the bond holders to roll over to paid over a three year period. Subex had raised heavily to buy two global telecom software products company just before the global economic meltdown of 2008-09 and had to drastically rework its expansion plans with the acquisitions. Investment bankers further indicated that they are options also to raise as much as $100 million as well, “which will settle the FCCB issue totally.”

The promoters along with the promoter group control 11.69 per cent in the company, which has a market capitalization of Rs 225 crore based on Monday’s closing price of Rs 32.65 an equity share on the National Stock Exchange.

Apax Partners is one of the world's leading private equity investment groups. It operates across the United States, Europe and Asia and has more than 30 years of investing experience. Funds under the advice of Apax Partners total over $40 billion around the world. Apax Partners Funds invest in companies across its global sectors of Tech & Telecom, Retail & Consumer, Media, Healthcare and Financial & Business Services. If this deal with Subex sails through, it will be the second major investment which this fund will be making after backing Nasdaq-listed iGate Technologies to take over Mumbai-based Patni Computers.