Indus Valley Partners looking for adjacencies, inefficiencies in acquisitions

Indus Valley Partners, a technology provider and consultant for asset managers, has begun an acquisition growth strategy looking for targets with adjacent services, said founder and CEO Gurvinder Singh.

Headquartered in New York City and Noida, India, the company plans to deploy recent backing from minority investor PPC Enterprises to buy companies that are subscale or that are “large and inefficient” that could benefit from Indus Valley’s global platform, Singh said.

Targets don’t have to be profitable but should be growing with a service that has proven value, he said.

Its initial potential targets have annual recurring revenue (ARR) in the range of USD 8m to USD 50m, Singh said.

Areas of interest for M&A include loan servicing, especially in and around the booming private credit space, he said. Companies with capabilities in asset-backed finance or those with specialized technology or managed services niches could also be attractive, Singh said.

Indus Valley Partners, which has more than 1,000 employees, is willing to buy a target as large as itself, “as long as it’s not value destructive,” the CEO said.

A transformative deal for a large target could be complex if the company’s growth was highly leveraged, he said. Indus Valley is willing to raise more capital if it finds a deal that requires financing, Singh said.

Singh speculated that his company is likely to make its first acquisition within a year.

Founded in 2000, the company has heretofore operated without external capital and with margins that enabled it to build up a capital base to help with acquisitions, if necessary, he said.

Indus Valley has had a compound annual growth rate (CAGR) of 22%-23% in recent years, Singh said, declining to disclose specifics about company financials.

It sought financial backing to supplement its organic growth with M&A because it saw market tailwinds for asset management support – particularly for alternative asset managers, Singh said.

The opportunity presented itself for Indus Valley to become a multi-billion-dollar firm, but it “needed to institutionalize our business more,” Singh said.

Indus Valley hired Jefferies to manage its minority stake sale, which ultimately connected the firm with PPC.

The middle-market private equity firm doesn’t use the normal closed-end fund management that most firms deploy for which investors are expecting returns by a set time. Most of its limited partners are pension funds, providing “very sticky capital” with long-term investment horizons, Singh said.

Indus Valley had fielded inbound buyout inquiries previously — mostly from strategics — but it never needed external capital until it decided to accelerate growth, the CEO said.

The company provides tech-enabled support, consulting and managed services to more than 160 buyside fund managers handling more than USD 4.2trn in assets under management (AUM).

Most of its business is based in North America, with about 15%-20% coming from European funds, he said.

Simpson Thatcher provides legal services. KPMG provides accounting services.