Saturday, December 1
Intelenet close to buys in travel, BPO space
MUMBAI: Barely a few months after the completion of the management-led buy-out (MBO) of Intelenet Global Services by Blackstone, the BPO firm has finalised two acquisitions, one in the travel domain and the other of a shared-services BPO. Both are global firms with a footprint across continents, sources with knowledge of the transaction told ET. The acquisitions, to the tune of $ 75 million, are likely to be financed through a mix of debt and equity. The management could not be contacted for comment. The acquisitions are in line with the strategy Intelenet had outlined at the time of the Blackstone transaction. The management had said the BPO would pursue inorganic growth opportunities, while growing its existing business lines organically. The names and other details of the target companies could not be ascertained. Investment banking sources said one of the acquisitions could also be a Blackstone group company. Blackstone has over 50 portfolio companies, mostly based out of the US. The two buys are learnt to be in transaction-processing as opposed to voice-based processes, which Intelenet is better known for. “Blackstone is very aggressive, so I won’t surprised,” said a merchant banker with a firm which advises on such deals. Most BPO firms are trying to move a greater share of their revenues from voice to transaction-based processes. Voice-based work is more capital intensive and also has a higher attrition compared to non-voice work. Intelenet has been looking for suitable buys in the US even prior to the Blackstone buyout. The backing of Blackstone has now given it the currency to make big ticket acquisitions. The US is the largest market for the BPO industry and cost cuts as a result of the subprime crisis and US slowdown are expected to incentivise more American firms to outsource. In the past, having Barclays as a parent had reportedly made it harder for Intelenet to have a nearshore presence in the US, and the company was working through partners in the US. The two buys will now give it a direct presence in the US, a key geography. That will also reduce its dependence on Barclays, which is setting up its own captive in India, but continues to be Intelenet’s largest customer. In June, HDFC, which was one of the founder promoters of Intelenet and Barclays, which had bought 50% stake in the firm, sold out to private equity firm, Blackstone. The $ 200 million transaction was one of the largest MBOs in the country. Post-transaction, Blackstone’s holding is 80% and that of Intelenet employees 20%. Blackstone had also said it would use Intelenet as a vehicle for its acquisitions in the BPO industry. In recent times, a number of multinational firms have shown interest in selling part or all of their stake in their captive BPO operations, and Intelenet was learnt to have participated in the initial round of bidding for Citigroup’s BPO, Citigroup Global Services. However, it had dropped out because the valuations of Citi’s BPO was perceived to be very high.