CVC Capital Partners Leads Race to Buy ValueLabs at $1–1.2 Billion Valuation
CVC Capital Partners in Advanced Talks to Acquire ValueLabs
In a significant move within the tech investment landscape, European private equity firm CVC Capital Partners is reportedly in advanced discussions to acquire a major stake in ValueLabs, a Hyderabad-based technology services and AI solutions company. Projected at a valuation between $1 billion and $1.2 billion (approximately Rs 9,000 crore), this transaction could reshape the competitive dynamics of the industry.
– Exclusivity Agreement Signed: CVC Capital Partners has formalized an exclusivity agreement with ValueLabs, and negotiations are currently underway to finalize the deal. Sources indicate that ValueLabs was founded in 1997 by Arjun Rao Donakanti, who currently holds an 87% stake in the company, with the remaining shares owned by his wife, Harini Rao Donakanti.
– Promoters Retaining Stake: As part of the transaction, the founding family is anticipated to retain between 15% and 20% ownership, ensuring continuity in the company’s operations under the existing management team.
Competitive Landscape for ValueLabs Acquisition
CVC Capital Partners is not the only firm interested in ValueLabs; other prominent contenders in this race include buyout giants EQT and Blackstone. The interest in ValueLabs gained momentum when ET first reported the potential stake sale in October.
– CVC’s Investment Portfolio: CVC is a global private markets manager with a diverse investment portfolio, overseeing assets worth $234 billion. Recent exits include the sale of a controlling stake in the Indian hospital chain Healthcare Global (HCG) to KKR for Rs 3,466 crore ($400 million) in early 2025. Additionally, CVC divested a 67% stake in the Indian Premier League franchise Gujarat Titans to the Torrent Group in February last year.
ValueLabs’ Services and Growth Potential
ValueLabs offers an extensive array of services, which includes:
– Software Development
– Digital Solutions
– Infrastructure Engineering
– Knowledge Process Outsourcing
– Product Development
– Automation and AI/ML
– Comprehensive Digital Transformation
Employing over 7,000 professionals across 30 global offices, ValueLabs serves more than 300 enterprise clients, positioning itself favorably in the competitive technology services landscape.
Financial Performance and Industry Trends
Recent reports showcase a standalone revenue of Rs 651 crore for ValueLabs, up from Rs 614 crore in FY24, alongside a net profit of Rs 51 crore, compared to Rs 47 crore in the previous fiscal year. However, the company’s FY24 EBITDA declined by 16% to Rs 84.9 crore, as per data from Tracxn.
The market for digital and technology services in India has attracted heightened interest from global investors, driven by an acceleration in enterprise adoption of AI and digital transformation. Noteworthy competitors include EXL, UST, Fractal Analytics, Accion Labs, and Happiest Minds, with the latter also reportedly up for sale.
– Investment Landscape: Rapid digitalization is pushing demand for cloud services, data analytics, automation, and cybersecurity. According to an Equirus Capital report, the IT sector’s share of total private equity and venture capital deal value surged to 35% from 23% year-on-year during the January to September 2025 period. Overall, PE/VC investments in India reached a three-year high of $26 billion in the first nine months of 2025, reflecting strong investor appetite for digital, SaaS, and AI-driven enterprises.
In conclusion, CVC Capital Partners’ pursuit of ValueLabs is a testament to the growing interest in the technology sector and the substantial potential for growth in the Indian market. Stakeholders will be watching closely as the negotiations progress, eager to see how this acquisition could redefine the landscape for technology services in India.