Atul Nishar, twice lucky

Nishar has managed to sell his stake in Hexaware to Baring Private Equity Asia in one of the largest deals in the IT sector for this year

Atul Nishar, founder-chairman of Hexaware Technologies, has been twice lucky in his entrepreneurial journey. This time, he has managed to sell his stake in Hexaware to Baring Private Equity Asia in one of the largest deals in the information technology (IT) sector this year. Nishar, a chartered accountant, founded the company in 1990, when the Indian sector was just about $100 million with no listed entity. As Nishar prepares to take over the role of non-executive chairman after Baring comes on board, he has taken the company to a revenue size of $364 million with 8,000 employees and 200 clients.

Before Hexaware, he had set up computer training company Aptech in 1985. In 2002, Aptech was sold to SSI and he focused on growing Hexaware. Even as he exited Aptech, he continued to be on the board of the company till 2003. That seems to be the case at Hexaware, too.

Asked how long he intended to be with Hexaware, Nishar said: “After the transaction is complete, I will be happy to continue as the non-executive chairman of Hexaware as long as Baring wants me to.”

Baring Private Equity Asia is investing $465 million in Hexaware to get a controlling stake. Baring is getting a 41.8 per cent stake from promoters and General Atlantic. Hexaware, though started at the same time as most of the other Indian IT companies, has focused on certain key segments so that it could provide a differentiating services to clients compared to multinational corporations and the large Indian IT firms.

Baring’s investment in the company also shows the Indian IT services sector continues to attract PE players. Though, the returns made by General Atlantic do not resemble a multifold growth in its investment. According to reports, General Atlantic’s return would be around 1.3x to 1.4x. It had picked up a stake in the company in 2006 by investing $67.6 million. After the deal, General Atlantic will get around $88 million.

“The IT industry is clearly very attractive for PE funds because of high growth, superior margins, earnings in strong currencies like US dollar, euro and pound, superior governance and availability of high quality management talent who can professionally run the business. I believe, lot more investment will come from PE funds,” said Nishar.

He would know, considering he has been in talks with several potential investors in the past. This included players like L&T Infotech, NEC and others. “We wanted to do what is best for all stake holders — employees, clients and shareholders. Baring was very happy with Hexaware's leadership team and the company's culture. This was important to us in decision making,” explained Nishar on the choice of Baring as an investor.

Though Nishar has always been at the helm of the company, he has always allowed professional managers to run the show. Rusi Brij, who joined Hexaware in 2001, took the company from a revenue of $50 million to $250 million by 2006. Similarly, P R Chandrasekar, the current chief executive, has put the company on the growth trajectory even in a globally weak business environment.

Baring is getting a 41.8 per cent stake from promoters and GA. If they are able to achieve 50 per cent or more, they will pay a price of Rs  135. But if they don't, the price they pay would be Rs  126 since they don't get majority control of the company.