Carlyle sells stake in Newgen back to promoter for $40 million

The Carlyle Group has exited its six-year-old investment in Chennai-based outsourcing firm Newgen Knowledge-Works, two people aware of the development said.

The US fund has sold its 55% stake to company promoter Prabhakar Ram for about $40 million, they said. In 2014, Carlyle had invested $33 million to acquire a 55% stake in Newgen, provider of outsourced publishing and technical services for many of the world’s largest publishers. It is the second time that Carlyle has made an exit from Newgen KnowledgeWorks, which has its major clients in the US, UK and Europe.

In 2004, Carlyle had invested about $10 million in Newgen and it sold the stake to a consortium of three funds for $30 million in 2011. Later, Carlyle acquired the stake held by Franklin Templeton Private Equity Strategy, Aureos South Asia Fund and ePlanet Capital in Newgen. Shankar Narayanan, a former managing director of Carlyle, was among the contenders for its stake in Newgen through his fund Sanaka Capital. Narayanan led the two rounds of investments in Newgen in 2004 and 2014.

Investment bank Veda Advisors had been appointed for running the stake sale process.

A Carlyle spokesperson declined to comment, while email and calls to Prabhakar Ram, founder and CEO of Newgen Knowledge-Works, did not elicit any response till the press time Monday.

In July, Carlyle had exited from diagnostic chain Metropolis Healthcare by selling its remaining about 1.2% stake in the open market. Carlyle had acquired about 31% stake in Metropolis from GSK Velu, former copromoter of the firm, in 2015 and half of the stake was sold during the company’s IPO.

In March, Carlyle had sold 10% stake in SBI Cards & Payment Services (SBI Card), the secondlargest credit card issuer in India, through its initial public offering (IPO). Following the IPO, Carlyle continues to hold a 16% stake in SBI Card. The US investor had acquired 26% stake in SBI Card from GE Capital in December 2017.

Carlyle has been aggressively betting on Indian companies for the last couple of years.

In October, it acquired about 20% stake in Piramal Pharma for ₹3,500 crore. In May, it had acquired up to 74% stake in animal health company SeQuent Scientific for about ₹1,580 crore.

Carlyle has total investment of about $3 billion in India till date. The private equity fund's Indian investments include Delhivery, HDFC, India Infoline, PNB Housing Finance, SBI Life and SBI Card.