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CMS likely to tap PE funding
By siliconindia
Bangalore : The privately-held CMS group, which is focusing on IT and IT-related areas, is considering a fund infusion through the strategic or private equity route. The Economic Times citing sources close to the development reports that Blackstone, 3I, Carlyle, TPG, and Standard Chartered's private equity arm are some of the funds that are in discussions with the Grover family, which promotes CMS.
The group is currently in the midst of a restructuring exercise and is looking at the private equity route to expand as well as get funds to invest in its businesses.
CMS consists of a clutch of unlisted entities that have revenues in the region of Rs 1,000 crore. It does not have any external funding. Only one of its group firms, Kaycee Industries, is listed. Kaycee, which makes electrical and electronic components such as switches, counters and meters, was acquired from Bajaj Industries.
Sources said the restructuring could see CMS transforming itself into a holding company with investments in different businesses. It may attract valuation of around $400 million, with a more definite figure crystallizing once the deal structure is clear, they added.
"Private equity may not be interested in taking a stake in businesses that are not very high growth. But even in areas like traffic, large orders are now happening," said an insider. Broadly, the re-structuring will result in five operating entities domestic IT, IT exports, IT-enabled services and IT-related services, it is learnt. KPMG has advised the firm on the restructuring. Traffic systems - another area where the group has been present in for many years - and security systems are expected to come under the IT-related services arm.
After domestic IT, the group's second largest business is software exports under Systime Computers. Systime does work in the area of enterprise software implementation. A large part of the domestic IT business comes under CMS Computers. Other synergistic businesses may also be brought under it.
