March 25, 2009, BANGALORE: Pharma Major Strides Arcolab promoter Arun Kumar has sold substantial part of his 50% stake in the Bangalore-headquartered IT services firm Nous Infosystems to the company management and chief executive Ajith Pillai, said a source close to the development.
Sources said Arun Kumar, as a financial investor, diluted around 25% of his stake, parked with investment arm Netequity, for roughly Rs 35 crore in a share buyback deal with the existing management. The transaction gives the company management majority control after simmering ties with the financial investor held back capital raising and expansion plans. The deal has valued Nous at around $25 million, or Rs 120-125 crore, almost mirroring its topline revenue, a source added. Prior to the deal, Nous CEO & promoter Ajith Pillai had 36% stake, while the management team held 14% leaving the remaining half with Arun Kumar. ET could not ascertain the respective shareholding of Mr Pillai and the management post-buyback.
When contacted, Mr Pillai confirmed share buyback but declined to divulge financial details. Strides Arcolab MD Arun Kumar declined to comment on his personal investments. o3 Capital is believed to have advised Nous on this transaction. The 13-year-old IT firm with over 1,000 employees has centres in Bangalore and Coimbatore. Last year, Nous was believed to be in discussions with private equity investors like Fidelity to chart an expansion strategy even though moves in this direction came unstuck due to shareholding problems.
It is also believed that a US mid-tier IT company Computer Generated Solutions (CGS) was exploring a strategic alliance with Nous as its size would compliment an India expansion strategy.
Nous provides IT services across multiple verticals - BFSI, healthcare, education and utilities - with the major markets being US, Europe, Australia and Middle-East. Its primary area of expertise lies in software services, enterprise application services, remote infrastructure management and testing.
Nous has around 200 customers with none of these accounting for more than 10% of its topline. Unlike many of its peers in the industry, it is estimated that the EBITDA of the company is in the low double digits as the company has made substantial investments in setting up its own sales and marketing offices overseas.
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