Bain Capital, Warburg Pincus, Chrys Capital and KKR invest in Quality Engineering & Software Technologies Ltd

Bain Capital, Warburg Pincus, Chrys Capital and KKR are mulling an investment in Quality Engineering & Software Technologies Ltd (QuEST). The four firms will be investing about $60 million, to be done by October this year, in the firm. Headquartered in Bangalore, Quality Engineering & Software Technologies Ltd designs software for firms such as GE, Rolls Royce and Airbus.

QuEST will put some part of the funds accrued from the sale into payment of its debt and expansion. The money will be spent as follows; about $20 million of the sum will go into the debt repayment, whereas an additional $30 million will be put into the expansion strategy that includes acquisitions in the engineering services outsourcing market in the country, said the firm. The firm will be advised on the investment by Morgan Stanley.

QuEST was begun by entrepreneurs Ajit Prabhu and Aravind Melligeri with savings and borrowing in 1997. The firm is made up of Quest Global Engineering, Quest Global Manufacturing and Quest Global Special Economic Zones (SEZ). When it began operations, its initial major order came from GE Power Systems, and was pegged at $20,000.

In 2009 November, the firm won a deal pegged at $100 million from SABCA, the Belgian aerospace major for the manufacture of metallic components and the assembly work for Airbus A-350 XWB aircraft’s flap track structures for the coming ten years. The deal marks a significant undertaking for the firm, as it seeks to grow its presence beyond India and increase its business offering.

Currently, Quality Engineering & Software Technologies Ltd is estimated to be valued at $100 million. The firm’s operations span the globe, with bases in India, the US, Italy, Spain, the UK, Japan, and France and with a strong workforce of 1,800 individuals. Quality Engineering & Software Technologies Ltd focuses its business on contracts that have projects with long lead time. However, its overall aim is to break into the automotive industry.

Back in 2003, the firm raised $6 million from the Carlyle Group through a stake sale, funds it put into growth and expansion but regained its stake later in October 2007 with the buyback of its stake from Carlyle. The company had to pull back its investment plans last year when it had planned to invest $2-3 million as the market turned unfavorable. QuEST is planning to acquire companies in the range of $10-20mn in low-cost locations for its engineering services vertical.

23 Sep 2010.