Mumbai-based Hexaware Technologies, backed by US private equity giant Carlyle, is gearing up for a landmark moment in India's IT services industry. The company has filed draft papers with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO), aiming to sell shares worth a staggering ₹9,950 crore. This IPO is poised to be the largest in India’s IT services and enterprise technology space, surpassing even Tata Consultancy Services’ ₹4,713-crore issue from over two decades ago.
Hexaware: A Global IT Powerhouse
Founded in 1990 and headquartered in Mumbai, Hexaware has grown into a global IT services and consulting firm. The company offers a wide array of services, including digital transformation, automation, cloud computing, business process outsourcing (BPO), and data analytics across industries such as banking, healthcare, and telecommunications.
Carlyle Group’s backing has provided Hexaware with the resources and global reach to expand its operations significantly. Today, the company operates across multiple regions, with a strong focus on delivering automation-driven solutions to its clients worldwide.
Offer for Sale: Carlyle’s Strategic Exit
Carlyle currently holds a 95.03% stake in Hexaware, and the entire IPO will be an offer for sale (OFS), where Carlyle aims to divest its shares. Valued at ₹9,950 crore, the IPO is expected to raise significant capital for Carlyle, as mentioned in Hexaware’s draft red herring prospectus (DRHP).
To manage the IPO process, Hexaware has appointed Kotak Mahindra Capital, Citi, JP Morgan, HSBC Securities, and IIFL Capital as advisors. The targeted valuation for the company ranges between $5 billion and $6 billion, though this could fluctuate based on market conditions at the time of the listing.
The equity shares are slated to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), further cementing Hexaware’s prominence in the Indian market.
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A Return to the Stock Market After Two Decades
If successful, Hexaware’s listing will mark a triumphant return to the Indian stock markets after 22 years. The company was first listed on June 14, 2002, according to NSE data, but was later delisted in 2020 by its previous promoter, Baring Private Equity Asia (now EQT). Carlyle’s acquisition of Hexaware in 2021 for approximately $3 billion was India’s largest private-equity deal at the time.
This IPO represents a significant milestone for Hexaware, not only marking its return to the domestic stock exchanges but also setting a new benchmark in India’s IT services sector.
Financial Growth and Market Presence
Hexaware’s financial performance has been robust, with the company reporting a revenue of $1.26 billion for the year ending December 2023, reflecting a 7.8% growth from the previous year. The company’s geographical revenue distribution highlights its global reach, with 72% of its revenue coming from the American market, while a similar percentage of its 31,000-strong workforce is based in the Asia-Pacific region.
The company offers a diverse portfolio of services, including IT, business process outsourcing, cloud computing, data analytics, and artificial intelligence solutions, catering to the evolving needs of global enterprises.
Competitive Landscape
In terms of competition, Hexaware counts some of India’s prominent IT midcap firms as its peers. According to its draft red herring prospectus, these competitors include Persistent Systems Ltd, LTIMindtree Ltd, Coforge Ltd, and Mphasis Ltd. These companies operate in a similar space, offering IT services and consulting solutions to a range of industries.
Conclusion: A Landmark IPO for India’s IT Sector
Hexaware Technologies’ IPO is poised to make waves in India’s IT services space, potentially becoming the largest such offering in rupee terms since TCS’s landmark IPO in 2002. With Carlyle’s strategic backing, a global service portfolio, and strong financial performance, Hexaware’s return to the bourses marks a significant moment for both the company and the Indian stock market.
Upcoming IPOs to watch: Apply and invest in the future!
As the company prepares to re-enter the stock exchanges, all eyes will be on Hexaware to see how this major IPO shapes the future of India’s IT services industry.
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