Home / Companies / News /  MuSigma’s Rajaram to raise debt to buy out Sequoia, others
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MUMBAI : Dhiraj Rajaram, the founder of artificial intelligence and data analytics business MuSigma, is set to raise about $220 million in offshore debt at an interest rate of about 4% to buy out investors Sequoia Capital and General Atlantic and over 14 angel investors, two people familiar with the development said.

This will raise Rajaram’s stake to about 85% from 51.6% in 2016. The rest of the shares are held by angels and employees.

Rajaram is raising the money from foreign banks, including Bank of Montreal, Bank of the West, and Spanish lender Banco Santander SA, one of the people cited above said, requesting anonymity.

The exact deal size could not be ascertained. But a part of the deal is also being funded through cash accruals and dividend payouts to investors. Sequoia and General Atlantic have been paring their stakes in the company over the past five years, beginning with a partial stake sale in 2016. “GA and Sequoia Capital stand to make 2.5-3 times on this investment," the person said. Both investors, who together held around 38% of the company, could have pulled out approximately $600 million together, including dividend payments.

MuSigma has returned over $900 million to its investors to date through a combination of equity buybacks and secondary trades and dividend payouts, the person cited above said. This includes the $105 million it returned to angel investors, including in this round. Former staff have so far got $45 million, the person cited above said.

Investors who have exited the business include FTV Capital and Mastercard.

General Atlantic did not respond to requests for comment. Sequoia Capital declined to comment.

A spokesperson for MuSigma and Rajaram declined to comment. “The company generated around $65 million to $70 million in earnings before interest, tax, depreciation and amortization (Ebitda) in the past year, making it one of the most profitable businesses in this segment," the person cited above added. “As a result, it has no need to bring on board other investors or opt for a public listing right now. It may, however, go public at a later date," the person added.

Some angels exiting include Accel co-founders Prashant Prakash and Subrata Mitra, Helion Ventures co-founder Ashish Gupta and American investor Bill Campbell, who was previously chairman of Visa.

MuSigma, which was founded in 2004, was last valued at approximately $1.5 billion in 2013. The current deal values the business at approximately the same size. However, this would be a conservative estimate, the person cited above said, because rival Latent View is valued at over $1.4 billion, on an Ebitda of $14 million and $45 million in revenue.

MuSigma has an annual revenue run rate of $150 million to $180 million. It employs around 3,000 people in India and 600 people in the US.

For MuSigma, this is a turnaround of sorts after a brief period of turmoil in 2016 when founders Rajaram and Ambiga Subramanian separated. At that point, Rajaram raised debt to buy out Subramanian’s stake, which took his shareholding to 51.6%, Mint reported at the time. General Atlantic and Sequoia Capital also sold some shares in that round.

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