Advent, Apax & Bain in fray for $240m Quest Global stake

MUMBAI | BANGALORE: Private equity majors Bain Capital, Advent International and Apax Partners are among the contenders to acquire a $240-million (around Rs 1,500-crore) stake in Bangalore-based engineering services company Quest Global, people directly familiar with the matter said.

Warburg Pincus has mandated Credit Suisse to sell its 20 per cent stake in the company valued at almost $1.2 billion, a formal process for which was launched in recent weeks. Other potential suitors including Baring Asia and General Atlantic Partners could also make make offers as the sale process rolls on, sources added.

Quest provides engineering outsourcing services to clients that include Rolls-Royce, GE, Pratt & Whitney and Airbus. Quest's revenue is estimated at $300 million and its consolidated operating profit is pegged at around $80 million. The company and Warburg are seen asking for a valuation of around 15 times the operating profit.

In June this year, TOI reported that Quest — co-founded by Ajit Prabhu and Aravind Melligere — could be the latest Indian IT services company to attract billion-dollar valuation citing a potential stake sale.

The company does not comment on speculation pertaining to its investment activities, Quest said in a statement. Warburg Pincus did not comment on the developments. Bain Capital and Advent said they had no comments to offers.

Warburg, which invested $75 million in Quest five years ago, is seeking an exit after the latter ramped up through acquisitions, including a significant buyout of NeST Software and Germany-based EDF in the past one year. Quest provides services in aerospace, defence, power generation, oil & gas, industrial and fast moving consumer goods, combining product development with low-cost engineering services.

It employes 7,500 people, of which 4,500 are in India. It is not clear whether the company would raise some fresh capital as part of the Warburg exit deal. Quest co-founder Prabhu had told TOI earlier that he would look at raising more funds within two years to retire debt, which stands at $100 million, including the amount borrowed for the EDF acquisition.

There's heightened investor interest in engineering services outsourcing (ESO) as Nasscom estimates suggest that India delivered business could touch $38 billion by the end of this decade, up from $15 billion currently.