Suitors jilt WNS after scrip heat

[jayanthi mandhalapu]

Several buyout funds and some strategic investors have turned their back on WNS Global Services, putting the stake sale plans of global privateequity firm Warburg Pincus in India's second-largest pureplay BPO firm in limbo.

Warburg wants to sell its 50.12% controlling stake in the NYSE-listed company. Technology buyout fund Silver Lake, PE companies Apax Partners and Bain Capital are believed to have lost interest after the initial due diligence, which kicked off on August 10.

In another setback, India's largest BPO firm, Genpact, is interested in a share-swap deal and not an all-cash transaction that Warburg favours, banking sources privy to the development told ET. EXL, a rival of WNS and Genpact, is also learnt to have backed out of the deal.

Almost all the firms that have exited the transaction have complained about the sharp spike in the scrip. Deal-making has become expensive with the WNS stock price climbing up to $15 level, nearly doubling in the last 60 days. The stock closed at $15.25 last Friday. WNS shares, which were trading at $7-8 in April and June, have been hovering in the $14-15.50 range in the past one month.

The flare-up in the WNS scrip has driven most suitors against indicating a firm offer after due diligence, which was expected by last weekend. Most of the potential bidders were comfortable with a price bracket of $10-12 per share, and believe it is difficult to bid conservatively now. Warburg is said to be looking at a price range of $18-19 per share, which is closer to the IPO price of $20.