Tech solutions firms tap into PE opportunities amid rising M&A deals
Empower your mind, elevate your skills
Rise of private capital investments into companies through mergers, acquisitions and buyouts is making private equity (PE) firms an attractive business opportunity for India's software service providers for growth and revenue diversification.With global PE dry powder exceeding $2 trillion and deal activity rebounding in key sectors like healthcare, insurance, and technology, this has turned into a lucrative market for IT services firms, according to US-based research and analyst firm Everest Group.If tech companies like Hexaware, Happiest Minds and GlobalLogic are lining up specialised solutions for PE players, larger players like TCS and Wipro see PE firms as customers for their generative artificial intelligence (genAI) offerings.'Over the past 18 months, leading service providers and consulting firms have invested in dedicated PE practices: hiring head of private equity business while building specialised solutions to support deal sourcing, AI-driven due diligence, and post-deal integration,' said Kriti Gupta, practice director at Everest Group.She highlighted increasing activity in portfolio companies as PE firms allocate dedicated digital and operational improvement funds to them, ensuring rapid approval and execution of IT initiatives.R Srikrishna, CEO and executive director of Hexaware Technologies , said, 'There are two potential markets there. One is PE companies as customers. Second is their portfolio companies, and how we can address solving for their technology challenges. Those are parallel markets.'Srikrishna said the aggregate ownership of PE in portfolio companies is estimated to be almost half of the ownership in public markets.'That's a pretty substantial market,' he told ET in an interaction. 'We're going with a focused approach to the ownership teams, talking about how we could help address and improve technology posturing in the particular companies.'Listed in February, Hexaware itself is owned by global PE firm The Carlyle Group, holding 74.71% stake as of March end. It has an annual revenue size of around $1.43 billion, or about Rs 12,250 crore.In March, mid-tier IT services company Happiest Minds Technologies announced its plans to expand business to the PE ecosystem by developing a set of offerings targeted at both PE firms and their portfolio companies. It would carry out due diligence of PE firms' acquisition candidates and help them with a post-acquisition roadmap, said CEO Joseph Anantharaju had said while making the announcement. 'I'm hoping by Q2 we should start seeing some results,' he added.Digital engineering and technology firm GlobalLogic, backed by Hitachi Group, has had a business unit for PE since the last 7-8 years, which is one of its largest business segments with around 25% revenue share, according to Piyush Jha, managing director for India and Asia Pacific at GlobalLogic.'As the tech sector consolidates, PEs are the largest consolidators as they have a lot of cash,' he told ET in an interaction. 'Last two years, they (PEs) did not spend much, waiting for the macro environment to shape up. Now we are seeing that pick up.'In a recent white paper, India's biggest IT major Tata Consultancy Services (TCS) said private capital firms must tap into AI to generate alpha or returns by transforming their operations across deal generation, due diligence, capital management, investments, and portfolio management.It said the private capital industry was set to revive in 2025, driven by the huge amounts of capital they hold, but at a slower rate. And the potential of AI to radically transform the private capital space is unprecedented. 'Private capital firms must launch targeted initiatives across key business facets to take advantage of the opportunity,' TCS said.Azim Premji-promoted Wipro, the country's fourth largest IT services player, believes that despite risks of regulation, data, privacy, etc, GenAI is swiftly becoming a transformative force in PE for portfolio growth. Additionally, PE investors' focus on exits and secure returns will see funds leveraging AI and GenAI for value creation.Both TCS and Wipro did not respond to requests for comment citing the ongoing silent period ahead of their FY26 first quarter results.A Bain report on private investors managing $3.2 trillion in assets, released in March 2025, found that most portfolio companies are participating in some phase of AI testing, with nearly 20% having operationalised GenAI use cases.All this underscores how technology is now viewed as a primary value-creation lever in the PE world, Gupta of Everest Group said.'As this industry moves to operational value creation, it is increasingly relying on service partners and consulting firms to deliver rapid system integrations, sector-tailored expertise, advanced analytics, and AI adoption to hit targets of IRR (internal rate of return) and Ebitda (earnings before interest, taxes, depreciation and amortisation),' she said.Srikrishna of Hexaware said PEs' priorities are somewhat different from regular companies in terms of time horizons for investments and getting value from them. 'It's all linked to when they invest and where they want to exit,' he said.He explained that PE firms invest early in the cycle and want to make sure there's value coming from those investments later in the cycle of an investment, because that's the time they will plan to exit.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
22 minutes ago
- Hans India
Breaking barriers, building experiences
In the world of hospitality, few names evoke both warmth and authority like Niketa Sharma, the Managing Director of Keith Hospitality and the powerhouse behind several acclaimed Mumbai-based restaurants. A serial entrepreneur with a sharp eye for concept creation and a heart that beats for people-first leadership, Niketa has built not just spaces to dine—but places to feel. 'I actually wanted to be a journalist,' she says with a laugh, 'but destiny had different plans.' With an in Financial Accounting and a Master's in International Hospitality from Les Roches, Switzerland, she carved her own path into an industry traditionally dominated by men. 'When I walked into investor meetings early on, I was often the only woman in the room. But I learned to carry myself with confidence. When you know what you're negotiating, gender becomes secondary.' Over the last four years, she has grown from her first restaurant to managing six restaurants, three banquets, and an in-house catering arm—all spread across Mumbai. 'Before that, I was managing our family's sports and recreation business in Thane,' she says, crediting her solid foundation in hospitality to those early years. But what makes Niketa's ventures stand out is her emotional architecture. 'All my restaurants are feminine. They're filled with sunlight, greenery, soft crystal colors—it's about creating comfort,' she shares. 'You're not just serving food; you're creating moments of joy, a vibe that calms nerves, invites vulnerability, and celebrates life.' Her leadership style echoes the same ethos—empowering, collaborative, and deeply human. 'Every team member has the authority to make decisions. Even if something goes wrong, we fix it together. That's how you build confidence,' she explains. With a 350-strong team under her, including executive chefs, operations consultants, and marketers, she leads from both heart and head. Niketa's journey has also been shaped by failures. She candidly recalls shutting down her first salon venture after five years. 'I held on too long out of emotion and ego. But I learned that in business, you must detach. If it's not working, pull the plug. Let the balance sheet speak.' Beyond her businesses, Niketa is passionate about mentoring women entrepreneurs, helping them navigate the same hurdles she once faced. 'The myth that women are too emotional to make rational business decisions needs to end,' she asserts. 'Women are just as capable of making hard, pragmatic choices when needed.' From being a young 22-year-old stepping into boardrooms full of 50-year-old men, to now defining the future of hospitality in Mumbai, Niketa Sharma's journey is one of grace under fire—and success rooted in soul.
The Print
27 minutes ago
- The Print
Crop loans: Over Rs 42 crore disbursed to farmers in Rajasthan
Jaipur, Jul 12 (PTI) The Rajasthan government has disbursed over Rs 42,131 crore in interest-free short-term crop loans to more than 75 lakh farmers since the formation of the new government, said an official statement on Saturday. The cooperative department has also expanded its network, setting up over 600 new cooperative societies across the state by June 30, 2025, the statement said.
Time of India
37 minutes ago
- Time of India
PM Modi distributes 51,000 appointment letters; 10 lakh jobs given since 2022
File photo: PM Modi (Picture credit: PTI) NEW DELHI: Government should never be a hurdle and should always be a facilitator of growth, PM Narendra Modi said on Saturday while virtually distributing 51,000 appointment letters for central government jobs, with this over 10 lakh recruitment letters have been issued through Rozgar melas since October 2022. Addressing the new recruits, PM Modi said the world acknowledges that India has two limitless strengths, one in demography and the other in democracy, the largest youth population and the world's biggest democracy. "This power of youth is both the greatest asset and the strongest guarantee for Bharat's bright future. Our government is working day and night to turn this strength into a formula for prosperity." Modi said every individual deserves the opportunity to move ahead and it's the responsibility of the government to extend a helping hand. " And you, my friends, are young. I have great faith in you. I have high expectations from you. Wherever you're assigned, you must always put the citizens first. Helping them, easing their difficulties-that alone will push the nation forward rapidly." Modi said besides giving permanent government jobs, his administration is also focusing on creating new employment opportunities in the private sector. Referring to the recent Cabinet decision on the Employment Linked Incentive (ELI) scheme, he said the government will provide Rs 15,000 to a youth getting their first job in the private sector, which means the first month's salary of such employees will be borne by the government. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Providers are furious: Internet access without a subscription! Techno Mag Learn More Undo For this, Rs 1 lakh crore has been allocated, he said. Highlighting a recently released report of the International Labour Organisation (ILO), Modi said it found more than 90 crore citizens in India have been brought under the umbrella of welfare schemes over the last decade, which is essentially an expansion of social security . He also spoke about the achievement of nearly 25 crore people rising out of poverty by "defeating poverty with their strength and courage". The PM said global institutions like the World Bank are openly praising India for this achievement and it's now being ranked among the top countries in the world in terms of equality. "This means inequality is decreasing rapidly, and we are moving toward greater equality. The world is now taking note of this transformation," he said.
