Norwest Venture Partners exits Persistent System

The company would have made five times on the latest round of stake sale as against its investment in 2005

Venture capitalist Norwest Venture Partners (NVP) today offloaded 6.64% stake in Pune-based Persistent Systems. With just 1.80% shares in the company, Norwest Venture has almost exited from its investment made in 2005.

Norwest Venture would have made at least five times on this latest round of stake sale compared to what the company invested in 2005. NVP’s 6.64% stake at the market price would be worth around Rs 128-130 crore. The sale was completed between December 17 to 19.

Norwest has been reducing its stake since November this year. NVP which had 13.51% stake in the company as of end of September 31, 2012 sold 5.07% for around Rs 100 crore.

Of this stake sale, SAIF Capital acquired 2.8%, or around 1.12 million shares of the company.

According to the Venture Intelligence database NVP had invested around Rs 63.06 crore for 15% stake in the company in 2005. “NVP is a VC and they have an investment cycle. They have completed seven years being invested in the company so the exit was about to happen. They remained invested in the company even three years after its public listing,” said a senior executive of the company.

Meanwhile, Persistent System’s stock today hit a new high, as its stock price touched Rs 522.05 per share. This was up 4.28% from the previous close.

Persistent provides outsourced product development services. According to its recent investor relation meet, analyst said the management sounded confident of the company’s growth exceeding Nasscom estimates of 11-14% year-on-year in FY13, despite macro challenged.

“Over FY2012-14E, the company is expected to record dollar and rupee revenue CAGR of 13.9% and 18.2%, respectively. The stock is currently trading at 10.2 times and 9.1 times its FY2013E and FY2014E EPS of Rs 48.0 and Rs 53.9, respectively,” said a note from Angel Broking.