Delta Partners joins KKR and co-shareholders in divesting Aricent to Altran

20 December 2017 Authored by Consultancy-me.com

Altran has acquired US design and engineering services company Aricent in a $2 billion deal, creating the largest specialised R&D and engineering group of the world. The French origin firm acquired Aricent from a group of investors led by KKR, which includes consulting firm Delta Partners. 

In 2010, Delta Partners invested an undisclosed sum in Aricent Technologies, a communications software company based in the US and established. The company initially operated in the late 90s as Hughes Software (it was established as an arm of India-based Hughes Electronics) and later as Flextronics Software Systems (the company was acquired by Singapore-based Flextronics in 2004). Following the purchase of 85% of the business by Kohlberg Kravis Roberts & Co (KKR) and Sequoia Capital in 2006, the organisation was rebranded as Aricent Technologies*. In 2009, KKR and Canada Pension Plan (CPP) Investment Board bought out the remaining 15% stake of Flextronics from telecom software maker Flextronics for $255 million. 

Months after the latter deal, Delta Partners, a Dubai-based consulting firm and equity investor with a focus on the telecoms, media and digital space, unveiled that it had also invested into Aricent Technologies. The consultancy executed the capital injection through its MENA Telecom Fund, a private equity fund focused on investing in telecommunications, media and technology (TMT) companies in the Middle East region.

Altran acquires Aricent in an all-cash $2 billion deal

Rogier van Driessche, one of the co-founders of Delta Partners, said back then that Aricent was facing a tremendous growth potential, adding that as part of the investment, the management consulting firm would work with Aricent’s management to accelerate its growth worldwide, with a particular focus on the Middle East and North Africa. “Given that we share a focus on TMT sectors, we expect to play an active role in supporting their business in our region,” remarked Driessche in February 2010.

Strategic support

Over the past seven years, Delta Partners has actively supported Aricent in its global development and growth through its board observer and strategic partner role, providing consultative support on the overall direction of the firm. This included providing specific input on its approach to developing global markets in the telecom sector. 

Today, Aricent generates revenues of $687 million with approximately 10,500 employees. The California headquartered company is regarded as one of the leaders in integrated design and engineering services, primarily serving clients of the Communications and Technology, Semiconductor and Software industries. The company’s growth strategy was delivered through a combination of organic growth, as well as inorganic expansion – in 2015, Aricent bought SmartPlay Technologies, a semiconductor service based firm with around 1,200 employees. 

Joining the other shareholders, including KKR and Sequoia Capital, Delta Partners have now agreed to sell their stake in Aricent to Altran. The acquisition, which is part of Altran’s ‘Altran 2020. Ignition’ strategy, created the globe’s largest player in the R&D and engineering landscape, with 44,000 employees operating in around 30 countries, generating close to €3 billion in revenues. Altran has been on an M&A spree in the past fifteen months, buying up India-based GlobalEdge, cybersecurity and logistics consultancies in Italy and the UK, Swell, a Czech Republic based automotive engineer, North American groups Lohika and Synapse. 

“Through this acquisition, Altran will be uniquely positioned to offer an unmatched value proposition to its clients and outpace competition. Altran will now have superior scale and scope, and now masters all four critical criteria necessary to lead the industry: a global presence and reach, leadership across most industries, strong expertise in key technology domains and a superior global delivery supply chain,” said Dominique Cerutto, Chairman & CEO of the Altran Group.Quote Kristoff Puelinckx

Frank Kern, Aricent’s CEO, added, “We are excited to join forces with Altran, an organisation that seamlessly aligns with our values and core mission. We look forward to working closely with them to bring even greater value to our clients.”

For Delta partners, the transaction implies a 3.4x multiple of money (MoM) on the capital invested by the management consultancy. Commenting on the acquisition, Kristoff Puelinckx, responsible deal partner for Delta Partners and Aricent’s board observer, commented: “We very much appreciate the close collaboration with KKR and the other shareholders of Aricent and the successful results achieved by CEO Frank Kern and his team over the years. The proposed transaction will forge an even stronger company in the sector and create a new global market leader.” 

Delta Partners has seven offices globally, in Dubai, Johannesburg, Barcelona, Singapore, Bogota, San Francisco and New York.

* The majority stake deal was worth $900 million, at the time the largest leveraged buyout in India’s history.

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