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Mumbai: Mu Sigma Inc.’s chief executive officer Ambiga Subramanian and US-based private equity investor General Atlantic Llc plan to sell their combined 48% stake in the data analytics outsourcing firm, said two people aware of the development.

General Atlantic has hired Citigroup Inc. and Credit Suisse Group AG to find a buyer at a valuation of $1.5 billion, said one of the people, both of whom requested anonymity.

“The combined stake may fetch a better valuation as the buyer can get hold of a large minority stake in a single deal than if each investor is selling separately," this person said.

General Atlantic is the largest investor in Mu Sigma, with a 24% stake. Subramanian, who divorced Mu Sigma founder and chairman Dhiraj Rajaram in May 2016, also has a 24% stake in the Chicago-based company. Other investors in Mu Sigma are Sequoia Capital, Fidelity Investments and MasterCard Inc.

Finding a buyer for their stakes at a valuation of $1.5 billion may be difficult given developments such as the divorce and the recent departures of senior executives, and the concern they have generated, said the second of the two people cited earlier.

The divorce between Subramanian and Rajaram followed the departure in July last year of managing director Ganesh Lakshminarayanan, who had joined the company a year earlier. Mu Sigma had hired Lakshminarayanan, former Dell India president and managing director, in 2014 to lead its Indian operations. Chief financial officer (CFO) Atul Bansal left the firm in March 2015.

“Ambiga may not continue in the role of CEO in the long term, although as of now, she will continue in the role," Rajaram was quoted as saying in a May report in The Economic Times.

Founded in 2004 by Rajaram, who previously worked for consulting firm Booz Allen Hamilton, Mu Sigma has raised about $178 million from private equity investors in three rounds since 2011. The firm has the exalted status of a unicorn among India’s start-ups—one with a valuation of at least $1 billion.

Rajaram also holds a 24% stake in Mu Sigma. Subramanian, a former Motorola engineer, 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 its Chicago headquarters.

In December 2011, Mu Sigma raised $108 million of funding in a round led by General Atlantic in the largest private equity investment in an Indian analytics services company.

In April 2011, Sequoia Capital invested $25 million in Mu Sigma. In 2013, Mu Sigma raised about $45 million in a round led by MasterCard with investors including Fidelity.

Spokespersons at General Atlantic and Credit Suisse declined to comment. Mails sent to Mu Sigma, Fidelity Investments, MasterCard and Citi on Friday went unanswered. “Sequoia is not selling any shares in Mu Sigma," said a Sequoia Capital spokesperson.

When contacted on Sunday, Subramanian refused to speak on the matter. She did not respond to text messages and e-mails sent on Friday. In a text message, Rajaram said the information is not correct, without elaborating. He did not respond to an e-mail sent on Friday.

Mu Sigma which counts Microsoft Corp., Wal-Mart Stores Inc., Dell Inc. and Pfizer Inc. as clients, plans to seek a listing on the Nasdaq within four years, Bloomberg reported in April 2015, quoting Rajaram. The firm aimed to increase annual sales to $1 billion within five to seven years from about $250 million then, the report said.

Mu Sigma, with about 4,000 employees, competes with established firms such as Tata Consultancy Services Ltd (TCS), Infosys Ltd and Wipro Ltd and start-ups such as New Jersey-based Opera Solutions and Fractal Analytics.

It is not the first time that General Atlantic is finding itself in a difficult spot with a portfolio company. In 2013, it locked horns with the promoters of Mumbai-based logistics firm Fourcee Infrastructure Equipments Pvt. Ltd by filing a petition with Company Law Board alleging forgery and willful deceit. General Atlantic invested $108 million in Fourcee in 2012.

General Atlantic, which has invested about $2 billion in India since 2002, has stakes in Indian companies such as IndiaIdeas.com Ltd, which runs online payment services provider BillDesk; IIFL Wealth Management Ltd, the private wealth management subsidiary of IIFL Ltd; popular fashion company House of Anita Dongre Ltd; healthcare technology provider CitiusTech Inc.; and power generation company Asian Genco Pte Ltd.

“These situations are difficult and the biggest issue is ‘who is in control’ and who is running the day-to-day operations and is value being lost. From a private equity stand point, if the management differences have become irrevocable, then they would prefer a quick resolution. There are different pools of capital available today and some can even help one of the promoters buy out the other," said Sanjeev Krishan, transactions services and private equity leader at PwC India.

If the existing private equity investor has the conviction, it may itself help one of the promoters buy out the other so the uncertainty ends, he added.

In a similar situation with leading diagnostics laboratory chain Metropolis Healthcare Ltd, where there were differences between promoters G.S.K. Velu and the Shah family (Sushil Shah and his daughter Ameera Shah), US-based private equity firm Carlyle Group entered the company by buying out the 37% stake held by Velu in September 2015. Before the fight escalated, the Shah family had acquired a 27% stake in April 2015 from existing private equity investor Warburg Pincus Llc with the backing of KKR India, the Indian arm of global private equity firm KKR and Co. Lp. This raised the family stake in the company to 63% from 36%.

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