“We can either do an IPO or if there is interest from a strategic buyer giving us good valuation, we are okay with it,” said Manish Tandon, CEO, CSS Corp, a $140-million technology company owned by Swiss PE firm Partners Group, on the company’s growth plans for the next three years.
In 2013, Partners Group acquired a majority stake in CSS in a $270-million transaction, and now owns 92 percent stake; the rest is held by employees, Tandon told Business Line. CSS has around 5,500 employees globally with nearly 3,950 of them in India, he said.
All PE-owned firms need to have an exit path. Some PE invested companies go through an IPO or are acquired by strategic buyers or bought over by other PE firms. Each fund raises capital for a defined time frame. They work in the private market and need to exit because they need liquidity. CSS’ case will be either an IPO or sale to the strategic buyer, he said.
If revenue crosses $200 million (about ₹1,400 crore), CSS can do an IPO, which will be mostly in India or any other capital market that gives more value, he said. For fiscal ending March 2018, the company will end with revenue of around $155 million, said Tandon.
Tandon said the company is in talks to acquire a fairly large company compared to CSS and expects to announce the deal in February or March, he said without giving further information.
Tandon said when he joined CSS a year ago there was too much focus on technical support, which was a business that was getting commoditized and without any growth prospect. The company’s strength was working with top global technology companies, including Alcatel-Lucent and Unilever.
Bets on digital
The company decided to limit its focus on technology, media and telecom sectors, and on e-commerce and digital businesses of brick & mortar companies with the focus on end customers. “We have moved from a pure services company to a new age services company by creating a platform and ecosystem for new digital world. We expect demand for digital services to be there for next 15 years,” he said.
Tandon said for a client making Wi-Fi routers, CSS used to provide technical support for end customers but today offers premium support where CSS bears the cost and shares revenue with the client.
For example, if a customer of the router company calls, CSS checks if the customer is interested in buying technology support for the entire home. Based on this, CSS sells and services that plan for which it takes 80 percent revenue and gives the customer 20 percent. It is a profit for the router company, he said.