Mu Sigma founder Dhiraj Rajaram in bid to acquire controlling stake

Data analytics start-up Mu Sigma’s founder Dhiraj Rajaram plans to buy out 48% owned by Ambiga Subramanian and General Atlantic; valuation differences may upset deal


Dhiraj Rajaram, founder and chairman of Mu Sigma. Rajaram is valuing the enterprise at $800 million while Ambiga Subramanian and General Atlantic expect a valuation of $1-1.2 billion. Photo: Aniruddha Chowdhury/Mint
Dhiraj Rajaram, founder and chairman of Mu Sigma. Rajaram is valuing the enterprise at $800 million while Ambiga Subramanian and General Atlantic expect a valuation of $1-1.2 billion. Photo: Aniruddha Chowdhury/Mint

Mumbai: Dhiraj Rajaram, founder and chairman of the data analytics firm Mu Sigma Inc., plans to acquire control of the firm by buying out the 48% owned by his former wife Ambiga Subramanian and private equity (PE) firm General Atlantic, said two people familiar with the deal-in-the-making.

Rajaram may be backed by sovereign funds, added the two, who asked not to be identified.

Singapore’s GIC Pvt. Ltd and Malaysia’s Khazanah Nasional Bhd are interested, they said, as is the Singapore government’s investment firm Temasek Holdings Pte Ltd.

Temasek and General Atlantic spokespersons declined to comment. Spokespersons for Khazanah and GIC did not respond to emails seeking comment. Rajaram denied the development. Subramanian did not respond to text messages and calls.

There has been some uncertainty over the future ownership and management of Mu Sigma, one of India’s hottest start-ups and earliest unicorns, after Rajaram and Subramanian finalized their divorce in May. Subramanian continues to be chief executive (CEO) of the company.

According to the two people, Rajaram’s plan is to acquire 27% from Subramanian and General Atlantic, giving him a 51% stake (he already owns 24% in the company). That would leave 21% with Subramanian and General Atlantic to be acquired by investors who agree to back Rajaram.

Differences over valuation could yet spike the deal. Rajaram is valuing the enterprise at $800 million while Subramanian and General Atlantic expect a valuation of $1-1.2 billion, this person added.

Subramanian and General Atlantic plan to sell their combined 48% stake in Mu Sigma and have hired Citigroup Inc. and Credit Suisse Group AG to find a buyer, Mint reported on 8 August. Venture capital fund Sequoia Capital also holds a minority stake in Mu Sigma and wants to stay invested. Spokespersons for Citi and Credit Suisse declined to comment. “Sequoia is not selling any shares in Mu Sigma,” a Sequoia Capital spokesperson said in August.

Founded in 2004 by Rajaram, who previously worked for consulting firm Booz Allen Hamilton, Mu Sigma raised about $178 million from PE investors in three rounds since 2011.

A former Motorola engineer, Subramanian joined Mu Sigma in 2007 as director and was elevated to the position of CEO in February 2016, replacing Rajaram. As CEO, she handles the Bengaluru office of Mu Sigma, while Rajaram focuses on client engagement in the US out of the company’s Chicago headquarters.

Mu Sigma, which has Microsoft Corp., Wal-Mart Stores Inc., Dell Inc. and Pfizer Inc. as clients, has around 4,000 employees and competes with firms such as Tata Consultancy Services Ltd, Infosys Ltd and Wipro Ltd and start-ups such as New Jersey-based Opera Solutions and Fractal Analytics.

It is not uncommon, even in India, for one or more of a group of promoters buying out a company with help from an investor. Differences between promoters are the main cause for such deals.

In April 2015, Metropolis healthcare chairman Sushil Shah and chief executive Ameera acquired the 27% stake in the company held by PE firm Warburg Pincus for Rs550 crore with the backing of PE firm KKR India. The deal gave control of the diagnostics chain to the Shah family, which ended up with a 63% stake in the company. It took place after differences arose between the Shah family and another promoter G.S.K. Velu, who owned a 37% stake.

Velu later exited the company by selling his stake to PE firm Carlyle Group for an undisclosed amount.

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