Hexaware tanks 17% as Baring PE likely to have sold 8.4% equity stake via block deals

Hexaware Technologies share price dropped as much as 16.6 percent in morning on Friday following likely dilution of stake by the promoter.

About 2.8 crore equity shares exchanged hands through multiple block deals at an average price of Rs 440 per share, reports CNBC-TV18.

These block deals are worth Rs 1,253 crore.

Baring PE is likely to have sold 8.4 percent stake in Hexaware via block deals.

"Baring is selling over 8 percent stake in Hexaware through a block deal. Investment bank Citi is running the transaction. The share sale is expected to fetch the PE firm a little over Rs 1,100 crore at a floor price of around Rs 447.5 per share. Shares will be sold to institutional investors," the Livemint said quoting a person familiar with the development.

Baring Private Equity Asia through its entity HT Global IT Solutions Holdings held 71.22 percent equity stake in the software company as of June 2018.

In 2013, Baring had purchased 42 percent equity stake in the company from its founder Atul Nishar and PE firm General Atlantic, followed by buy out of additional stake through open offer.

Meanwhile, IIFL has initiated coverage with Add rating on Hexaware and a target price of Rs 520 per share, citing positives - healthy deal wins, steady growth in top accounts and stable margins.

"Hexaware is uniquely positioned to participate in structural trend of IT spend. We expect dollar revenue/EPS to grow at a CAGR of 14/20 percent over CY17-20," the research house said.

It believes the stock is an attractive long term story and margin expansion is key for re-rating.