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October 6, 2016
martinwolf Transaction Analysis
Blackstone To Sell Pactera to HNA Group
 
Financial Information
  • Enterprise Value                                    $930 Million
Transaction Facts
  • Global private equity firm Blackstone Group (NYSE: BX) was reported to have agreed to sell Chinese IT outsourcing firm Pactera Technology International to HNA EcoTech, the technology unit of Chinese conglomerate HNA Group.
  • The transaction represents an exit for Blackstone at more than 1.5x its initial investment, made in March 2014 along with the company's management and other investors.
  • Though the transaction has not yet closed, media reports indicate that the sale was agreed upon in August.
  • The transaction process began when Blackstone hired Morgan Stanley to sell Pactera at the beginning of the year.
A Chinese Company Returns to Domestic Ownership
  • Seeing and Seizing Opportunity: Blackstone initially invested in Pactera in an effort to secure a foothold into China's burgeoning technology outsourcing space, which has primarily been the domain of Indian firms. At the time, it was one of several take-privates of Chinese firms, which were affected by a series of accounting scandals. 
  • Despite Domestic Pivot, Weakness Remains: In an effort to capitalize on China's growing domestic IT market, Pactera has broadened its outreach to Chinese clients - but this approach left the company vulnerable to rising wages. This hurdle, along with weaker European economic performance, drove Pactera's margin performance in the first 9 months of 2015 to under 3 percent (compared with 8.7 percent in 2014).
  • Another Big Buy for HNA: HNA Group, a Chinese conglomerate with roots in the aviation and logistics industry that is No. 353 on the Fortune Global 500 List, has been particularly active this year. In February, it agreed to acquire Ingram Micro for $6 billion - the largest Chinese takeover of a US IT company.
For more information about this transaction,  click here to read the media report.

martinwolf was not the advisor in this transaction.

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With offices in New York and the San Francisco Bay Area, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 140 transactions in nineteen countries and sold seven divisions of Fortune 500 companies. 

 

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