PEs, pension funds show initial interest in $600 million Mu Sigma stake

MUMBAI: Private equity heavyweights Blackstone, KKR & Co, Warburg Pincus along with Ontario Teachers' Pension Plan are among the potential bidders for a large minority stake in big data analytics company Mu Sigma, which is one of the Indian unicorns (private enterprises valued at $1billion or more). Mu Sigma's founder Dhiraj Rajaram's estranged wife and CEO Ambiga Subramanian and current investor General Atlantic Partners plan to sell their combined 48% stake in the company at a valuation of around $1.5 billion, people directly familiar with the matter told TOI.The investment banks mandated by the sellers have reached out to global pension reign wealth funds seeking their preliminary interest, sources privy to the development said.
The transaction could fetch GA and Subramanian as much as $600 million depending on the final valuation. TOI, in its May 31 edition, had reported about the marital split between Rajaram and Subramanian, though the duo had insisted their divorce would not impact their 12-year old company.
On August 8, business daily Mint reported that investment banks Citigroup and Credit Suisse had been mandated for selling the shares held by Mu Sigma's present CEO Subramanian and the company's largest investor General Atlantic. They own about 24% stake each in the company .
When contacted, General Atlantic Partners declined to comment on TOI's query. An email sent to Subramanian remained unanswered till the time of going to press. When asked about potential suitors prospecting a large stake buy , Rajaram said, “this is untrue“ in an email.
Blackstone and KKR declined to comment on speculation.An emailed query to Warburg remained unanswered at the time of going to press, while Ontario Teachers' Pension Plan could not be reached immediately .
Jointly headquartered between Chicago and Bengaluru, Mu Sigma helps large corporations with data-driven decision making and has annualized revenue estimated at $200 million.The company got its unicorn status when MasterCard invested three years ago, and currently has over $150 million cash as it enjoys healthy margins. But the founder's marital discord has affected the business, impacting the company's operations and slowing growth. The events of the past year have softened Mu Sigma's valuation, which could fall to around $1 billion as the two large shareholders consider exits. Mu Sigma employs over 4,000 staff and has witnessed layoffs in recent months.
One of the sources cited earlier said buyout private equity funds could lose interest as the deal making was unlikely to deliver control.