Carlyle likely to invest $200 M in IT services firm UST Global

Carlyle Group, Marquee PE investor, is in talks to invest a sum amount of $200 million in UST Global, the California-headquartered IT services firm with significant India operations, as outsourcing and technology services continue to attract significant capital.

UST Global had approached several big PE firms including Blackstone Group, Apax Partners and Bain Capital, but the talks did not move further. Even Warburg Pincus was approached but Carlyle has now emerged as the front-runner, multiple sources close to the negotiations told ET.

"The negotiations are in the final stages. It's a firm with decent track record and quality management at its helm. A definitive agreement could be signed within a few weeks," said one of the sources mentioned above.

UST Global is owned by the Kenya based NRI Chandaria family that controls the $4-billion conglomerate Comcraft Group. Though the exact quantum of stake Carlyle will snag is not known, one of the sources said it could be up to a third while others said Carlyle could get 10-15% stake at a valuation of $1.6 billion.

Last month, UST Global signed a three-year contract with the Consumer Credit Division of UK's Provident Financial Group (PFG) to support the latter's digital technology transformation.

The three-year-long contract will include designing, launching and running an offshore 24x7 operations command centre, technical support centre and a security operations centre. It will provide development, testing and support capability in the areas of business intelligence and master data management The Chandaria family was part of the Indian promoter group of MSM that ran Sony Entertainment Television before its stake was bought out. The family also own the Indian franchise of Kidzania with actor Shah Rukh Khan. In Africa, the group has interests in steel, commodities and manufacturing.

Bulge bracket private equity funds have been aggressive investors in India's showpiece $120-billion IT services industry, where the funds have got stellar returns in the past.