The most recent transactions include New Mountain Capital’s purchase of around 70-75% stake in Access Healthcare valuing the firm at a $2 billion, Kedaara Capital’s $350 million investment in Impetus Technologies, HIG Capital’s acquisition of Converge Technology Solutions for around C$1.3 billion and Agilitas PE’s acquisition of Tietoevry Tech Services for 300 million euros.
“Some sub-segments like cloud and analytics have grown 20-40% ( especially since 2020-2024 ), even in large-scale businesses. That is why there is a growing interest in large deals,” said Shobhit Jain, head of enterprise, technology and services at Avendus Capital.
This flurry of deal-making in 2025 comes in the wake of a robust wave of around 21 PE-backed deals valued over $ 300 million, which were sealed in the period January 2024 to March 2025. This compares to nine such deals that were closed in the previous year, industry data showed.
The bulk of PE-backed deals have been in the digital engineering, healthcare revenue cycle management (RCM) segments, with at least 70-80 new buyers having entered the market, according to Avendus’s Jain. Among the active dealmakers are PE funds such as Blackstone, Carlyle, EQT Partners, Barings PE Asia and Chryscapital.
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Typically, PE backers are known to seek healthy exits from these transactions and most often prefer to take these companies public, as evidenced by the most recent public listing of a PE-backed tech firm – Hexaware, bankers said. India’s software products market is projected to grow from $15 billion in FY23 to $44 billion by FY31, underscoring the expanding potential for technology investments, as per a March report by SaaSBoomi and 1Lattice.Analysts are of the view that in prevailing industry conditions, a purely organic growth model does not yield high double-digit growth, this is triggering the wave of mergers and acquisitions, particularly in areas like product engineering, data analytics, cloud, generative artificial intelligence.
Gaurav Vasu, founder and CEO of data and research platform UnearthInsight, said PE-backed IT Services firms have been extremely aggressive when it comes to acquiring specialised firms with a view to hastening inorganic growth.
“In the last three years, M&A investments by PE-backed IT services firms grew by over 200%, largely driven by Coforge, Hexaware, CitiusTech, Mphasis, R Systems (PEs include Blackstone, Barings PE Asia and ChrysCapital), he said.
Moreover, private equity funds prefer to invest in and boost the growth of large technology businesses.
“Today, anywhere between 20–25% of PE funds’ AUM is being allocated to tech services. Tech services provide multiple exit opportunities, with safe capital yielding 4–5x MOIC and a 35–40% IRR (internal rate of return). This attracts not just PE funds but also sovereign funds, due to the multiple exit opportunities,” Jain of Avendus said.
He estimates that there are still 50–70 large global funds that have not yet entered tech services, pointing to further headroom for expansion.
In another five years, as companies grow and double in size, the bar will shift. “The $300 million deals will become minimum $500 million deals, $1 billion will become $1.5 billion and you will see $2 billion-plus deals. This shift will happen much quicker than before,” he added.
