MUMBAI: In a first for the Indian private equity industry, American private equity fund Carlyle will reinvest in a company it had exited in 2010 by buying back the stake from investors to whom it had sold back then. Carlyle will buy 54.95% in unlisted Chennai-based Newgen Knowledge Works, a content management and technology solutions provider across digital media, from its investors, Franklin Templeton, Aureos and ePlanet, for Rs 200 crore. The global fund will then increase its stake in the company to 75% in a few years by investing an additional Rs 200 crore.
In 2004, Carlyle had first invested $9.3 million in Newgen. In 2011, seven years into the company, the fund more than trebled its investment when it sold the stake to the consortium of three funds for $30 million.
Aureos South Asia and ePlanet Capital will double their returns after fully exiting the company.
ET was the first to report the deal on December 3. Started in 1996 by promoter Prabhakar Ram, Newgen provides out sourced publishing services to many of the world's largest and most prestigious publishers, particularly in the US, the UK, and Europe. It offers a complete project management service for books and journals, taking on key processes such as author liaison, development editing, copyediting, design, artwork and permissions, typesetting composition, XML creation, ebook delivery, and backlist conversions.
"We are happy to partner with Carlyle again, which engaged in numerous value creation activities and acted as a catalyst in the growth of the company during its previous stint with Newgen," said Prabhakar Ram, founder and chief executive of Newgen.
Ram started with Rs 12 lakh capital, and built Newgen, which is now valued at Rs 370 crore.
"Carlyle has committed to invest an additional Rs 200 crore in the next few years to raise its stake to 75%," a person with direct knowledge of the deal said.
The company made a profit-aftertax of Rs 34 crore in the year to March 2014 on a revenue of Rs 120 crore. It has 900 employees across its offices in Chennai and Bengaluru.
"Newgen's diversification into adjacent businesses is intended to add value and create upside possibilities to its highly consistent and profitable business model," said Shankar Narayanan, managing director, Carlyle India.
"These include financial publishing through its UK subsidiary Spectra digital marketing and discoverability through its subsidiary ePagemaker and bespoke publishing and documentation solutions through its UK subsidiary GPSL."
Carlye Growth Capital Fund has invested about Rs 2,400 crore in Indian companies in the past seven years and given better returns to its investors. The fund had a seven-fold blockbuster exit from dairy company Tirumala for Rs 1,800 crore.