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Global private equity investor Investcorp is set for its first buyout transaction in India. It has already signed an agreement to pick up a majority stake in Unilog, which caters to small and medium businesses in the US with its software-as-a-service (SaaS) e-commerce solutions, a senior Investcorp India executive said in an interview.

Headquartered in greater Philadelphia, US, Unilog has around 700 employees across its campuses in Bengaluru and Mysuru, and helps distributors, manufacturers, and wholesalers boost online sales, reduce costs and enhance their digital channels. It is led by chief executive officer Suchit Bachalli.

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“In the developed markets we are known as a mid-market buyout fund. That’s what we do for a living. India is very different, where while buyouts are increasing, close to 80% of the transactions are still minority transactions. In India this is our first buyout. Because this is a India-US corridor deal, while we have a team in India, clients and revenues are in US," said Gaurav Sharma, head of private equity, Investcorp India.

The investment includes a capital infusion in Unilog, as well as a secondary acquisition of shares from existing shareholders, including venture capital investor Kalaari Capital.

According to Sharma, the market that Unilog is targeting in the US is large and under-penetrated. “If you look at the B2B distributors and retailers in the US, only 25% of the revenues are coming right now from online. There is a large under-penetrated market, a $10 billion market that exists, that we are looking to tap into. We have close to 350 customers today. We aim to grow that base to 1,000 to 1,500 over the next two to three years," he said. Its annual revenue is at $15 million, growing at a compound annual growth rate of 40% in last three fiscal years.

Unilog’s customers include hardware distributors who cater to retailers in smaller towns in the US. “These B2B distributors did not have an online channel. They were only selling offline. They have thousands of SKUs (stock keeping units) and Unilog enables them to transact online. These small distributors don’t want to spend a high upfront price to acquire such software and that’s why the SaaS model works well for them," Sharma said.

The capital will help Unilog’s product innovation and sales, he said. “Investcorp in the US has a history of investing in B2B firms in the distribution space and that is what we will bring to the table at Unilog," Sharma said.

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