Sequoia Hikes Stake To 9.7% In KPO eClerx

Sequoia has picked up an additional 2.9% stake via an open market transaction in the BSE-listed entity.

Sequoia Capital is increasing its stake in knowledge process outsourcing firm eClerx Services Ltd.

The venture and growth capital investor has picked up an additional 2.9% stake in the BSE-listed eClerx through an open market transaction for Rs 29.7 crore ($6.53 million). With this deal, Sequoia now holds 9.7% in the firm, making it the largest institutional shareholder.

The stake has been bought by Nambe Investment Holdings, a foreign institutional investor (FII) sub account of Sequoia Capital India Operations LLC.

eClerx was one of the first Indian KPOs to go for an IPO and was listed in 2007. The company provides data analytics and data process management services to the retail, manufacturing and financial services industries.

Sequoia had initially picked up a 6.8% stake in eClerx for Rs 43 crore in August last year at a price of Rs 330. Since then, the stock has moved, hitting a high of Rs 540 on March 5.

A Sequoia spokesperson declined to comment on this development when contacted by Neytri.

The most recent stake by Sequoia was done at Rs 539.39. The stake was sold by Burwood Ventures, an investment firm based out of Virgin Islands which invested in eClerx in 2005. Burwood’s stake would now go down to around 5%. The shares of eClerx were trading at Rs 494.10 on Tuesday, marginally down from Monday’s close of Rs 495.45.

A niche outsourcing player, eClerx reported sales of Rs 69 crore with a net profit of Rs 21 crore for quarter ending December 2009. This as compared to sales of Rs 51 crore and net profit of Rs 16 crore in the same period in 2008.

Sequoia, which was earlier known as Westbridge, has backed a number of outsourcing and information technology plays in India. It has invested in business process outsourcing company Firstsource Solutions, software product development firm GlobalLogic and legal services outsourcing firm Pangea3.

Since the market meltdown in 2008, Sequoia has been an active player in the Indian capital market and building up stakes in listed firms. It has already profitably exited from IT services firm Cognizant Technology Solutions and Hyderabad-based infrastructure firm Nagarjuna Construction.

Sequoia, which manages around $1.8 billion across India-dedicated venture and growth capital funds, has also continued its pace of deal-making in the privately held firms. The firm is close to buying a 9.4% stake in rating agency Credit Analysis and Research Ltd (CARE) for Rs 73.5 crore ($16 million), reported Economic Times today. Sequoia declined to comment on this deal too.

If the deal materialises, it could be the first PE investment in a credit rating agency in the country. The deal would value CARE in excess of Rs 780 crore ($172 million).

Sequoia’s other recent investments include kitchen appliances company Stovekraft, microfinance institution Equitas, travel agency Via, eyecare clinic chain Vasan Health Care and local search firm Just Dial.