India has seen very few management buyouts (MBOs) over the years, though this could change very soon.
It is widely expected that private equity giant Blackstone Group will this week announce an investment in BPO firm Intelenet, which HDFC is trying to exit.
That’s part of the story. It has been reported that the Intelenet top management will be part of the investor group that is likely to buy the company, making this deal a management buyout.
There have been a few such deals in the past. For example, private equity firm Actis participated in an MBO of a division of ICI Paints. Senior managers at a few other companies have thrown their hats into various buyout rings in recent years—UDV, Kyndal India, Thomas Cook and Hughes Software, for example. Not all these bids proved to be successful.
Cheap funding and private equity are likely to fuel more MBOs in the future—and they should be welcomed.