Hexaware Technologies Set to Re-Enter Stock Market with ₹9,950 Crore IPO

Hexaware Technologies, a major IT company in India, is gearing up for a significant re-entry into the stock market. The company has filed for an Initial Public Offering (IPO) aiming to raise ₹9,950 crore, which will be the largest public issue in the Indian IT sector. Interestingly, Hexaware delisted its shares during the COVID-19 pandemic in 2020, and now, amid the ongoing market bull run, it is ready to return with a massive IPO.

IPO Details: A Complete Offer for Sale (OFS)

The entire IPO will be an Offer for Sale (OFS), where CA Magnum Holdings, a part of the US-based private equity firm Carlyle Group, will sell its stake. Carlyle acquired Hexaware from Baring Private Equity in 2021. The funds raised from this IPO will go entirely to the promoter, with a portion of the shares reserved for employees.

Hexaware’s Journey and Current Operations

Hexaware Technologies, known for offering IT, business process outsourcing (BPO), cloud computing, data analytics, and artificial intelligence services, has a strong presence in the tech sector. After being delisted by Baring Private Equity during the downturn of the pandemic, the company was acquired by Carlyle Group in 2021.

Largest IT Sector IPO in India

This ₹9,950 crore IPO could potentially value the company at around $4 billion or more, marking a significant milestone in the Indian stock market, particularly in the IT sector.

Lead Managers and Listing Plans

To handle this large public issue, Hexaware Technologies has appointed Kotak Mahindra Capital Company, Citigroup Global Markets, JP Morgan India, HSBC Securities, and IIFL as the lead managers. KFin Technologies will act as the registrar for the issue. Hexaware shares will be listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

This move is seen as Hexaware’s strategic attempt to capitalize on the ongoing bullish market sentiment and attract investors with its strong IT service portfolio. As the IT sector continues to grow in India, the company’s re-entry is expected to draw significant attention.

Carlyle Withdraws Dividends from Hexaware

Private equity firm Carlyle, which acquired IT services company Hexaware Technologies Limited for approximately $3 billion (Rs 22,201 crore) in November 2021, has since withdrawn $165 million (Rs 1,380 crore) from the firm through dividends, according to the draft red herring prospectus (DRHP) the company filed last week.

In the first full financial year after Carlyle’s takeover, from January to December 2022, Hexaware paid a total dividend of Rs 663.7 crore. This was nearly three times the dividend paid in the previous financial year, which stood at Rs 240.9 crore, as shown in the DRHP.

For the financial year 2023, ending on December 31, Hexaware distributed a total dividend of Rs 530.8 crore. Additionally, for the six-month period ending June 30, the company paid Rs 258 crore in dividends. Since Carlyle’s acquisition, Hexaware has paid out a total of Rs 1,452.5 crore in dividends.

Carlyle currently holds a 95.03% stake in Hexaware, meaning its share of the total dividends paid since the acquisition amounts to approximately Rs 1,380 crore.

Conclusion

Hexaware Technologies’ upcoming IPO marks its return to the Indian stock market after delisting in 2020. With a massive ₹9,950 crore public issue, the company is poised to make a strong comeback, offering investors a chance to participate in the booming IT sector. All eyes will be on the market as this major IT player prepares for its grand re-entry.