PE FIRM KOHLBERG KRAVIS ROBERTS & CO (KKR) UPS STAKE IN ARICENT TO 79% IN $175-M DEAL

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PRIVATE equity firm Kohlberg Kravis Roberts & Co (KKR) has increased its stake in its first Indiabased investment. The world’s largest US-based PE fund has invested $175 million to raise its stake from 69% to 79% in Delhi-based telecom software solutions provider Aricent.

Canada Pension Plan (CPP) investment board has also picked up a 5% stake in Aricent for $80 million. KKR as well as CPP purchased the shares from the Singapore-based Flextronics, the original promoter of Aricent. The transactions mark Flextronics’ exit from Aricent.

Aricent, earlier known as Flextronics Software Systems, was spun off from Flextronics in 2006 when KKR had acquired a majority stake in the company for $900 million.
   Flextronics said it sold its remaining stake in Aricent to raise cash and improve financial flexibility. The stake sale is part of the company’s plan to sell non-core assets to shore up its balance sheet.

The other stakeholders in Aricent are Sequoia Capital and The Family Office, which own the balance 16% equity.

Aricent, which is a global innovation, technology and outsourcing company focused exclusively on communications, grew by 21% year-on-year. It reported a revenue of $465 million for FY09. The firm had $300 million debt, of which $50 million has been paid off.

"We are pleased to invest further in a company that has just reported its highest annual revenue in its history and continues to grow its customer base. This investment reflects our belief in management and the company as they continue to grow Aricent at this very important time in the communications industry,” said KKR India CEO Sanjay Nayar.
KKR did not disclose how much cash the CPP investment board infused into Aricent.

Aricent CEO Sudeep Nandi said further infusion of investment on KKR’s part was a sign of faith.

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