Electra sells 23% holding in Zensar Technologies Limited to Apax
Monday, October 12, 2015
(Press Release) – A subsidiary of Electra Private Equity plc, on 9th October 2015, sold its entire 23.2% shareholding in Zensar Technologies Limited to funds advised by Apax. The Zensar shares are listed in India, but the transaction was concluded off-market. The sale value was US$129m, and the realisation concludes an investment that has returned to Electra 16x total cost (in US$ terms) and has given an IRR of 18%.
The original investment in 1997 of US$9m allowed the spin out of the software services subsidiary from its parent company (which manufactured computer hardware). Four years later, when the hardware operation had been wound-down, the software business reversed into the quoted shell and was renamed Zensar. The business has grown strongly and steadily due to the growth trend in the software services sector, where India retains a competitive advantage, plus non-organic growth from a number of acquisitions that gave Zensar access to specific technologies and specialisations. At the time of Electra’s investment, Zensar employed 900 people compared to over 8,000 today.
Electra was able to remain a shareholder for an exceptionally long time for a private equity firm due the nature of the ultimate shareholder, Electra Private Equity plc, an investment trust quoted on the London Stock Exchange that has specialised in private equity for over 25 years. The compounding of an 18% IRR over many years results in a substantial gain for the firm. Electra played an active role in Zensar with John Levack on the Zensar board for 12 years. Electra, and John Levack prior to joining Electra, is a pioneer of investing in Indian software services and followed this by being amongst the first firms to spot the potential of BPO services in the Philippines.
Electra Private Equity plc has been reducing its exposure to Asia for a few years to reflect a change in investment strategy. The Electra Asian portfolio, following the sale of Zensar, has returned 5 times the total cost of the Asian investments (excluding the Zensar investment, the portfolio multiple is 3.5x cost).
