Bahrain’s Investcorp buys NSE IT for ₹1,000 cr, to double down on software deals in India

Bahrain-based investment firm Investcorp has acquired the National Stock Exchange’s digital services business for ₹1,000 crore, its largest private equity deal in India signalling its ambition to double down on the country’s information technology and cybersecurity space.

The deal excludes the digital examinations business housed under NSE.

NSEIT Ltd has grown significantly in the US market over the last four years catering to a diverse range of clientele, including capital market players, investment banks, and large conglomerates. It also operates in West Asian markets.

Gaurav Sharma, head of Investcorp’s India investment business, said that nearly 70% of the firm’s investment pipeline in the country is focused on the software business services and healthcare sectors. 

“Software business services is an active vertical for us right now. We would be happy to look closely at new deals in the space over the next 6-9 months,” Sharma added.

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Investcorp’s other notable investments include logistics firm Xpressbees and online meat delivery platform FreshToHome.

Avendus Capital advised NSEIT on its acquisition by Investcorp.

The NSEIT buyout offers a platform play in financial services in developed markets for Investcorp, especially in the US, said Varun Laul, partner at Investcorp.

“Given how rapidly the world is becoming digital, companies have realised that cybersecurity needs can be managed with a mix of in-house and outsourced capabilities. Since financial services is among the most regulated sectors in the world, a platform like NSEIT has gained importance,” Laul said, explaining why NSEIT caught Investcorp’s eye.

Investcorp has invested in several IT services firms globally, including in the Netherland-based Netrom Software and the UK’s Ubisense. 

Over the past 2-3 years in India, Investcorp has looked at dozens of deals in the space with a focus on specialisation in financial markets, cybersecurity and digital transformation, according to Sharma.

“When it comes to backing a mid-market IT services firm, the biggest question is how to compete with the large global players. This is where differentiation and quality of service comes in,” Sharma said.

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Investcorp, which manages $50 billion in assets globally, currently has less than 2% of its total assets under management in India. However, it aims to double down on the market and take it to $5 billion AUM over the next five years. 

In an earlier interview with Mint, Investcorp had said it would ramp up both its pace of investments and cheque sizes in India.

Investcorp will continue focusing on the mid-market investment space as it presents various opportunities in India. “This is an area where Indian businesses need support. As they mature and emerge out of the venture capital ecosystem, private equity assistance becomes crucial,” Sharma said.

Recently, the alternative investment firm launched a $100-billion platform anchored by China Investment Corporation to invest in Gulf Cooperation Council nations and China. Target sectors include consumer, healthcare, logistics and business services.

In March, Investcorp’s portfolio company NDR Warehousing listed India’s first warehousing and industrial parks infrastructure investment trust on NSE.