GlobalLogic to expand business with CPPIB investment

Today, with around 11,000 employees globally, the company has a revenue run rate of around $400 mn

Canada Pension Plan Investment Board (CPPIB) buying 48% stake in GlobalLogic Inc, with an enterprise value of the software product development outsourcer at $1.5 billion, gives Apax Partners three times exit in four years.

It is also a vindication for the outsourced product development company, among the pioneers to look at India as a base to offer services to build software products as a service than delivering IT services to global customers. Their model will be valued increasingly as traditional services are under threat from automation and customers look at higher skilled workers to transform their business than focus than building applications and deliver maintenance.

GlobalLogic was founded in 2000 by Rajul Garg, Sanjay Singh, Manoj Agarwala, and Tarun Upadhyay, who bet that they can replicate the offshore delivery model that Indian firms pioneered in services in the product domain. The domain expertise required for a product services firm was different, an insight that led the founders to bring in a CEO to run the company. It had raised funds from New Atlantic Ventures, WestBridge Capital and New Enterprise Associates.

In 2013, Apax Partners acquired GlobalLogic, bringing in an international board and setting up new delivery centres in Slovakia and Poland for newer product focused skilled workforce.

Apax partners will retain 48% stake in GlobalLogic, as part of the deal they signed on Thursday, with the remaining with employees. Today, with around 11,000 employees globally, the company has a revenue run rate of around $400 million.

GlobalLogic expects demand for these services has grown significantly in the past five years and is expected to continue to do so as next-generation cloud-based software platforms, mobile and web applications, and Internet of Things (IoT) have amplified the urgent need for design-led software development expertise. Creating these types of products requires advanced skill-sets, as well as large development teams to build and support these solutions that truly accelerate digital innovation for customers, it said in a statement.

"In the past three years with Apax, we've enjoyed a 20% plus compound annual growth rate (CAGR), consistently outperforming the broader product engineering services (PES) market," said Shashank Samant, CEO, GlobalLogic. "We look forward to leveraging the combined resources of Apax and CPPIB, a well-capitalized partner, to help us continue our strategy and execute our growth agenda for years to come.