Apax leads race for $450-$500M stake buy in IBS

Mumbai: Private equity firm Apax Partners is the front-runner to acquire a significant minority stake in IBS Software from Blackstone and has signed an agreement for exclusive negotiations to buy a 32% stake in the software solutions provider to the travel industry, people in the know said.

Apax is believed to have offered $450-$500 million for the stake, valuing IBS Software at $1.4-$1.5 billion, they said. JP Morgan is advising Blackstone to find a buyer for its stake. Apax, CVC Capital and Thomas H Lee Partners had been shortlisted for the stake sale, ET reported on April 12.

Spokespeople for Blackstone and Apax declined to comment.


About eight years ago, Blackstone had invested $170 million to acquire the minority stake in IBS Software. It is expected to make a return of nearly three times on this investment, said the people. If the deal is materialised, Apax will become the third PE firm to have invested in IBS Software. Blackstone had bought the company's stake in 2015 from General Atlantic, which was with IBS Software since 2007.

IBS Software, founded in Thiruvananthapuram in 1997 by VK Mathews, serves more than 200 clients worldwide, employing over 3,500 professionals of 30 nationalities. It operates 15 offices across the globe. In India, it owns campuses in Thiruvananthapuram, Kochi, Bengaluru and Chennai.

IBS Software's solutions for the aviation industry cover fleet & crew operations, aircraft maintenance, passenger services, loyalty programmes, staff travel and air cargo management. It is estimated to have made $90 million in earnings before interest, tax, depreciation and amortisation on revenue of $270 million in fiscal 2023, said the people.

Globally, the software-as-a-service company competes with US-based Rockwell Collins and Swiss company SITA.

Apax Partners, an aggressive investor in the Indian IT/ITeS space, owns digital and software services provider Infogain, 3i Infotech's software products business and a minority stake in artificial intelligence & analytics solutions provider Fractal Analytics. It had invested in outsourced product development firm GlobalLogic.

Indian SaaS companies are expected to grow in the range of 20-25% per annum to $35 billion in annual recurring revenue by 2027, and capture an 8% of the global SaaS market, according to a recent report by Bain & Co.

Whether measured in total annual recurring revenue of $12-$13 billion in 2022, up four times over the past five years; or investment ($5 billion in 2022, up six times), the Indian SaaS progress is irrefutable, and its future trajectory is promising, said the report. This momentum is driven by a mutually reinforcing flywheel of SaaS companies and investors, with a proliferation of new companies with proven growth models, supported by investors who are allocating increased capital to Indian SaaS across stages, it added.