Serco acquires Intelenet Global Services

UK support-services provider Serco Group Plc has struck a deal to buy Intelenet Global Services Pvt. Ltd. for L385 million ($634 million). Serco will acquire the 66% holding in Intelenet of Blackstone Advisors India Pvt. Ltd. and the remaining 34% stake from Housing Development Finance Corp., Barclays Bank Plc, and Intelenet’s management team.

The deal will bolster Serco’s global delivery capabilities. In 2008, Serco paid $423 million for the US government services provider SI International and also acquired a majority stake in another Indian outsourcing firm, InfoVision Group. The combined business processing-related operations of Serco and Intelenet will have 40,000 employees.

Headquartered in Mumbai, Intelenet has over 32,000 employees in 34 global delivery centres across seven countries, including a centre in Kraków established in 2009. Key customers include Barclays, State Bank of India, Travelport, Apria Healthcare, BSNL and Aircel.

Intelenet offers a broad range of middle and back office services including transactional, process and voice support, finance and accounting services and business transformation consulting such as process redesign and re-engineering. The international BPO business primarily focuses on three vertical markets — banking,financial services & insurance; travel, hospitality & transport; and healthcare.

The global business-process market is estimated to be between $350 billion and $500 billion and is forecast to grow at around 15% a year, according to the Everest Research Institute, a research firm specializing in outsourcing firms.

Quoted in the Wall Street Business Journal, Nikhil Rajpal, partner, Everest Group, said, “More transactions will be seen in the near future as companies strive hard to scale fast and add capabilities…. Indian BPOs are attractive for global companies due to their high margins.”

For the year to 31 March, 2011, Intelenet’s revenue was approximately L170 million ($272 million) and adjusted operating profit was L19 million ($30 million). Quoted in the Wall Street Journal, Akhil Gupta, chairman and managing director, Blackstone India, said Intelenet got about 27% of its revenue from Blackstone’s portfolio companies and the deal with Serco includes contingent cash payments of up to L50m through to December 2013, dependent on the delivery of additional revenue to Intelenet from Blackstone portfolio companies and Barclays.

“Expectations are that Intelenet will continue to achieve organic annual revenue growth of 10 per cent to 15 per cent and maintain its adjusted operating profit margin,” the company reported. Intelenet has recently taken its listed arm Sparsh BPO Services Ltd private and by default, that firm will also come under Serco.

Stake details
HDFC, the major Indian financial services company, and Tata Consulting Services (TCS), set up Intelenet as a 50:50 joint venture back in 2001. HDFC acquired TCS’ 50 per cent stake in Intelenet for Rs 161 crore in July, 2004, and sold it a month later to Barclays for Rs 164 crore.

In 2007, Blackstone bought an 80 per cent stake in Intelenet for $260 million. Last October, Barclays picked up 12.75 per cent stake in the holding company of Intelenet for an undisclosed stake. HDFC also bought back a minority stake some time ago and held a small stake in the company.

At the time of sale, Blackstone owned 66 per cent stake, Barclays 12.75 per cent, HDFC 4.5 per cent and the remaining 16 per cent was held by the management team.

Source:
VCCircle
http://www.vccircle.com/500/news/blackstone-sells-stake-in-bpo-co-intelenet-for-634m-serco-new-owner

Wall Street Journal
http://online.wsj.com/article/SB10001424052702303657404576358271317991458.html