Microsoft, rivals eye buyout of HR firm Darwinbox

The KKR-backed firm has reportedly attracted acquisition interest as it prepares for a potential IPO in the next few years.

KKR-backed services provider Darwinbox is drawing buyout interest even as it prepares for a potential public listing over the next couple of years. Existing investors Salesforce and Microsoft, along with US-based HR and payroll services provider ADP, have approached its founders and board with the intention to buy others out, three people with knowledge of the development said. Darwinbox was valued at around $1 billion when it raised $140 million from KKR and Partners Group in March last year.

KKR-backed Darwinbox is reportedly drawing buyout interest from investors including Salesforce, Microsoft and ADP (Darwinbox)

“All the options are on the table. That is the beauty of the current capital markets in India,” one of the persons cited above said on the condition of anonymity, as these discussions are private.

Darwinbox draws buyout interest from existing, strategic investors

According to this person, from time to time, investors Salesforce and Microsoft have been expressing their desire to acquire the company. “High growth SaaS (software as a service) companies with domain expertise are seeing a lot of traction from global financial as well as strategic investors, and Darwinbox is no different,” the person said. The firm has so far raised $290 million across various funding rounds. Other investors include 3one4 Capital, Lightspeed, Sequoia, Salesforce, Microsoft and TCV.

A spokesperson for Darwinbox denied any talks for a stake sale, saying the company plans to pursue an initial public offering (IPO) in the medium term and is on track to do so. Queries emailed to Microsoft and Salesforce remained unanswered. An ADP spokesperson declined to comment.

Salesforce, Microsoft and ADP see different opportunities

According to the second person in the know, while Salesforce and Microsoft want to add payroll services to their bouquet of products, companies such as ADP that are already into the domain want to deepen their expertise. “Darwinbox sits right in the middle of the aspirations of these companies,” said this person, adding that the company’s board is yet to take a call on the offers it is getting.

The third person said Darwinbox is now likely to be valued at around $1.8-2.0 billion.