Advent, Bain eye Warburg stake in outsourcing firm QuEST - sources

By Sumeet Chatterjee and Karen Rebelo

MUMBAI (Reuters) - Private equity investors Advent International, Bain Capital and Silver Lake are set to submit final bids for a minority stake worth about $200 million in engineering outsourcing firm QuEST Global Services, two sources directly involved in the deal said.

QuEST, which provides engineering outsourcing services to companies in sectors including aviation, automobile, oil and gas, power and healthcare, is headquartered in Singapore but more than half of its staff are located in India.

The buyout groups are likely to submit separate, final bids to buy U.S. private equity firm Warburg Pincus' 20 percent stake in QuEST by end of next week, said the sources, who declined to be named as they were not allowed to speak to the media.

The deal is expected to value the company, founded by former General Electric engineer Ajit Prabhu in 1997, at roughly $1 billion as investors bet on a pickup in outsourcing demand for engineering services by Western companies, they said.

Outsourcing of engineering work by global corporations has risen rapidly in the last few years, as companies take advantage of the vast pool of engineers in low-cost locations such as India to cut costs and boost efficiency.

Indian engineering outsourcing services providers earned export revenue of $12.4 billion in the fiscal year ended March 2014, and this is expected to surge to as much as $45 billion by 2020, according to the outsourcing sector lobby group NASSCOM.

One or two more private equity firms could also submit bids for the stake on offer in QuEST, which has 31 facilities across the world including in the United States and Europe, and a deal is expected to be closed by end of next month, the sources said.

Advent, Bain, Warburg and QuEST declined to comment, while Silver Lake, a technology-focused private equity firm with more than $26 billion in assets under management, did not immediately respond to Reuters request for comment.

The transaction, if closed, will add to the surge in private equity investments in Asia's third-largest economy this year.

Private equity firms have invested $5.7 billion in India in the first nine months of 2015, up from $4 billion in the same period last year and $2.3 billion in January-September period of 2013, according to Thomson Reuters data.

(Reporting by Sumeet Chatterjee and Karen Rebelo; Editing by Clara Ferreira Marques and David Evans)