ranu vohra, managing director and ceo, avendus
DESCRIPTION
NASSCOM: India leadership Forum 2009,Day3, Session 15A: M&A in 2009: Gazing into the crystal ball, Ranu Vohra, Managing Director and CEO, AvendusTRANSCRIPT
M&A in 2009: Gazing Into The Crystal BallAvendus CapitalFebruary 13, 2008
Private & Confidential
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PE/Buyout Funds Have Played An Active Role In The Strategic Growth Of Indian IT/BPO Industry
IT/BPO Continues To Remain Favorite Sector For PE Investments
Crucial Access To Capital For Expansion & Growth
Key Value Add By PE Investor
+
Improved Customer Confidence+
Positive Impact On Company’s Brand Due To Strong Pedigree Of The Fund
+
Business Development By Leveraging Fund’s Sector Expertise & Networks
+
Long-term Stewardship Of The Company
+
Enhanced Corporate Governance Plans
+
Year Company PE/Buyout Fund
2008 CMS* Blackstone*
2008 cBaySystems Lehman & S.A.C. Private Capital
2007 Intelenet Global Blackstone
2005 Genpact General Atlantic, Oak Hill Capital
2002 WNS Warburg Pincus
Notable Buyout Transactions In The Past
Nu
mb
er o
f D
eals
PE Investments In India Across Key Sectors
Source: Venture Intelligence
* Closing in progress
Private & Confidential
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Year 2008, Though Challenging Saw Growth In M&A/PE Activity In Terms Of Value From Last Year
Comparison By Deal Type (By Value ) Comparison By Deal Type (By Volume)
Comparison By Geography (Cross Border M&A)
+18% - 23%
Source: Venture Intelligence, Merger Market
$3,640 MM$4,279 MM 207
159
Private & Confidential
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Valuations In Technology Sector Are At Historical Lows Which Could Potentially Slowdown M&A / PE Activity In Year 2009
With An Overall Weak Macro Environment, It Is No Surprise That Key Indicators For Indian IT Companies Are Also Pointing To A Shakeout And Slowdown In Near And Medium Term
Source: BSE Website
Valuations For Indian IT Companies Are At The Lowest Levels Seen In Last 7 Years
TTM P/E Multiple: BSE IT Index
Increasing Pressure on Billing Rates
Weak Revenue Growth
Pressure on EBITDA Margins
Pressure on PAT Margins
Offshore Advantage Reducing
Investments
Private & Confidential
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Current Environment Is Also Expected To Have A Bearing On M&A Strategies For Mid & Large IT/BPO Companies
Focus On Non-Linear Growth+
Tap The High Growth Domestic Market+
Serious Focus On Geographical De-risking+
Focus On Vertical De-risking+
Consolidate To Increase Size, Scale, Service Offerings, Client Base And Leverage SG&A Synergies+
Expected M&A Strategies
Private & Confidential
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Avendus Capital
IL& FS Financial Center B Quadrant, 5th Floor,Bandra Kurla ComplexBandra East, Mumbai 400051Landline: +91 – 22 – 6648 0050Fax: +91 – 22 – 6648 0040
The Millenia Tower A, 10th FloorNo 1 & 2 Murphy Road, UlsoorBangalore 560008Landline: +91 – 80 – 6648 3600Fax: +91 – 80 – 6648 3636Website: www.avendus.com
Contact Details
Ranu Vohra
Email: [email protected] Cell: + 91 – 98200 97727Landline: + 91 - 22 – 6648 0000