MUMBAI U.S. private equity firm Bain Capital is in advanced talks with the Government of Singapore Investment Corp (GIC) GIC.UL to make a joint bid for a 40 percent stake in IT outsourcing company Genpact (G.N) for $1.5 billion to $2 billion, three sources with direct knowledge of the matter said.
Private equity firm Apax Partners LLP APAX.UL is also competing for the stake in New York-listed Genpact, the sources said, declining to be identified because they were not authorized to speak to the media.
Most of Genpact's employees are in India, where IT outsourcing firms have thrived by providing Western firms with services such as processing insurance claims, managing payrolls and customer support at sharply lower cost.
Private equity firms General Atlantic LLC and Oak Hill Capital Partners, the two top shareholders of Genpact with stakes of 20.1 percent each, are looking to exit the company, the sources said.
A deal is expected to be completed by the year-end, two of the sources said.
Genpact, GIC and Bain declined to comment, while Apax Partners, Oak Hill and General Atlantic could not immediately be reached for comment.
General Atlantic may sell its full 20 percent holding in Genpact or retain a small stake and sell it later through secondary share deals in the United States, the sources said.
Genpact, which has a market value of about $3.7 billion, was set up by General Electric Co (GE.N) in 1997 in the north Indian city of Gurgaon to provide back-office services to its group companies.
In 2004, General Atlantic and Oak Hill together bought a 60 percent stake in the company from General Electric and it became an independent service provider.
Genpact, the seventh largest IT and back-office employer in India according to industry group Nasscom, was listed on the New York Stock Exchange in August 2007. The stock fell 0.5 percent on Thursday to $16.37.
Citigroup (C.N) and Morgan Stanley (MS.N) are managing the stake sale process, the sources said.
Bain, the private equity firm co-founded by Republican presidential hopeful Mitt Romney, has completed fundraising for its second Asia fund, closing at $2.3 billion, one of its senior executives said on Tuesday.
It had previously talked with other would-be partners about joining it in a bid for the Genpact stake, sources said.
U.S.-listed software firm iGate (IGTE.O), backed by Apax Partners, last year bought a majority stake in India's Patni Computer Systems for $1.2 billion.
(Additional reporting by Saeed Azhar in SINGAPORE; Editing by Ranjit Gangadharan and Ryan Woo)