Mumbai: BDO India, one of the country's leading professional services firms, has held exploratory talks with three or four private equity (PE) companies to raise growth capital, multiple people aware of the plans told ET.
BDO would thus become the second top-six firm after Grant Thornton Bharat to seek external funding, reflecting the global trend of PEs buying into the professional services space. As part of the move, BDO India has transitioned its services business operations from a limited liability partnership to a company in a deal valued at '750 crore, clearing the way for a major private equity investment, said people with direct knowledge of the matter. The transaction will entail capital gains tax of '100 crore.
The firm is diluting 15-25% stake in its non-audit services company and is looking at dilution of a similar stake in its technology arm, BDO India Technology Solutions (BITS), which develops proprietary tax, audit, accounting and finance tech applications. The funds will be used to expand its market beyond India and drive the consolidation of BDO member firms, especially in the Asia-Pacific region. It is in an advanced stage of acquiring a majority stake in some of the member firms in this region, said one of the sources quoted above.
People familiar with the conversations between the firm and potential investors said BDO India is seeking aggressive valuations.
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"While mid-sized European firms with 3-6% growth are asking for a 1.5-2x revenue multiple, similar firms in the US with 12-14% growth are targeting around 2x. In India, the expectation is significantly higher, and BDO India is reportedly seeking nearly double that," one person said.
BDO India LLP is expected to post a top-line of around ₹1,500 crore for FY25-26, following three years of consistent annual growth in the range of 26-30%.
Roughly 65% of its revenue now comes from non-audit verticals such as tax, outsourcing, advisory, and deal services.
Given that BDO hasn't had any PE deal in its member firms globally BDO India is closely working with BDO International to ensure that there are proper guardrails-like never giving up control- for receiving external funding, said people quoted above.
BDO India didn't respond to ET's questionnaire on the subject.
BDO would thus become the second top-six firm after Grant Thornton Bharat to seek external funding, reflecting the global trend of PEs buying into the professional services space. As part of the move, BDO India has transitioned its services business operations from a limited liability partnership to a company in a deal valued at '750 crore, clearing the way for a major private equity investment, said people with direct knowledge of the matter. The transaction will entail capital gains tax of '100 crore.
The firm is diluting 15-25% stake in its non-audit services company and is looking at dilution of a similar stake in its technology arm, BDO India Technology Solutions (BITS), which develops proprietary tax, audit, accounting and finance tech applications. The funds will be used to expand its market beyond India and drive the consolidation of BDO member firms, especially in the Asia-Pacific region. It is in an advanced stage of acquiring a majority stake in some of the member firms in this region, said one of the sources quoted above.
People familiar with the conversations between the firm and potential investors said BDO India is seeking aggressive valuations.
Demand Premium
"While mid-sized European firms with 3-6% growth are asking for a 1.5-2x revenue multiple, similar firms in the US with 12-14% growth are targeting around 2x. In India, the expectation is significantly higher, and BDO India is reportedly seeking nearly double that," one person said.
BDO India LLP is expected to post a top-line of around ₹1,500 crore for FY25-26, following three years of consistent annual growth in the range of 26-30%.
Roughly 65% of its revenue now comes from non-audit verticals such as tax, outsourcing, advisory, and deal services.
Given that BDO hasn't had any PE deal in its member firms globally BDO India is closely working with BDO International to ensure that there are proper guardrails-like never giving up control- for receiving external funding, said people quoted above.
BDO India didn't respond to ET's questionnaire on the subject.
