KKR, Bain Cap join race to acquire 50% stake in WNS

WNS, the NYSE-listed business process outsourcing (BPO) player, continues to attract expressions of interest from its peers, as well as private equity players, to acquire the 50 per cent stake in it of investor firm, Warburg Pincus.

Private equity players Kohlberg Kravis Roberts & Co (KKR), Bain Capital, Carlyle and BPO-IT players like Genpact and Cognizant are understood to have expressed interest in acquiring the stake, according to sources close to the development. Genpact declined to make any comment in this regard.

At the current price of $14.49 per share, Warburg’s stake would fetch around $308 million (around Rs 1,480 crore). WNS, with a revenue of $386.4 million (around Rs 1,850 crore) as of March 31, is the second largest BPO player in India.

WNS, in a US Securities Exchange Commission (SEC) notification, has acknowledged receiving an expression of interest but says it’s yet to decide on any definitive agreement. “We have received expressions of interest from various interested parties regarding possible change of control transactions. WNS is committed to maximising shareholder value and is evaluating these opportunities, as well as other alternatives. However, as of the date of this announcement, WNS has not entered into any definitive agreement with any party relating to any such transaction, and no assurances can be given that any such agreement will be entered into, or on what terms,” WNS said in a statement.

“Bain Capital is evaluating two to three deals presently, one of which could be WNS. The PE players also plans to close at least one deal in the next two weeks,” said an investment banking source on condition of anonymity. “The deal has been going on for some time. But it is not moving ahead due to valuation issues,” said a source from an IT firm that had evaluated the Warburg Pincus stake.

“Players like Carlyle, Bain Capital and KKR have been shown the deal. I think valuations would get intense, going ahead. As the stake is substantial, a player will need deep pockets to acquire this stake. One should also not rule out a syndicated deal, wherein two or three players would come together,” said a banker.

Warburg Pincus is the principal shareholder in the company. Prior to the listing of WNS in July 2006, Warburg Pincus had a 64.7 per cent stake in the company, which came down to 53.64 per cent after it sold 1,490,000 shares of the company. On March 31, Warburg has 50.12 per cent stake with 21.3 million shares. Other shareholders in the company are Nalanda India Fund (12.22 per cent), Columbia Wagmer Asset Management, L.P (9.98 per cent), FMR LLC (9.43 per cent) and Tiger Global Management (6.6 per cent).