It’s a trend that has caught many by surprise and just can’t be ignored by Dalal Street and the broader tech sector—the once-ignored mid-cap IT companies have seen a spate of deals over the past few weeks including hostile takeover offers and buyouts of promoter stake. No surprise that mid-cap IT stocks have suddenly become investors’ favourite on hopes of merger and acquisition opportunities with leading tech players globally.
The latest deal announcement relating to mid-cap tech companies came on the weekend. And Baring Private Equity Asia and related entities have signed definitive agreements to purchase approximately 30 per cent shareholding in NIIT Technologies from NIIT and other promoter entities at Rs 1,394 per share for nearly Rs 2,627 crore. In addition, the overseas acquirer will acquire an additional 26 per cent stake via an open offer price of Rs 1394 per share.
The above deal is being done at approximately 19.9 times estimated consolidated earnings of NIIT Technologies for the financial year ended 31 March 2020. Rajendra Pawar, chairman, NIIT Technologies, in a media statement said, “NIIT Technologies has long-standing relationships with marquee customers globally in several verticals including travel, banking and insurance. The involvement of Baring Private Equity Asia will provide further impetus to take the company to the next level of growth.”