Citi Venture Capital International (CVCI) is buying the shares of SourceHOV held by Apollo Global Management. Other small shareholders of the firm are also being bought out by CVCI. The value of the deal has not been disclosed yet.
However, the estimated values indicate that this may be the largest investment by CVCI in a portfolio related to India. SourceHOV is a US based firm that was established a few years ago when HOV Services LLC merged with Sourcecorp Inc. Sourcecorp Inc. is Apollo’s portfolio company. The financial advisor hired by Apollo for the transaction was Credit Suisse.
SourceHOV is a medium size PO and BPM firm with approximate revenue of $525 million and has a large customer base among the Fortune 500 companies. The domain expertise of the company lies in document centric applications related to healthcare providers and payers, public sector, finance and banking, insurance, legal, commercial industries, manufacturing industries etc.
At present, the company has over 12,600 employees who work in the 80 plus delivery centers spanning six countries- Mexico, India, the Philippines, the US, Canada and China.
The deal is another huge PE deal in the industry. It was only last year that Bain Capital and GIC joined hands to buy $1 billion stake in Genpact.
Value of the deal
The size of the deal has not been disclosed, but with Genpact as the benchmark, the deal between CVCI and Apollo would amount to tens of crores of rupees. Genpact is garnering twice its revenue before, but this may be attributed to the fast growth of the firm with a topline growth of 50 percent in just the past two years. On comparison, the revenues of SourceHOV grew 10 percent below that of Genpact during this period.
The merging of Sourcecorp and HOV Services LLC had resulted in annual revenues of $481 million and the number of employees amounted to 14,000. The merged entity also obtained $625 from a group of banks like Credit Suisse, Jefferies and UBS to meet capital requirements and refinance debts.
Apollo has taken over Sourcecorp Inc. private, a consulting services and BPO company based in Dallas, previously for a deal which was worth $475 million.
HOV, HandsOn and CVCI
HOV Services is a subsidiary of HandsOn Venture which is a private equity firm based in Santa Monica. The HandsOn Venture has over $800 million assets for management. HOV Services is a key portfolio company o the firm in India which became public in 2006. The revenue driver was mainly BPO.
After merger with Sourcecorp, HOV Services had shrunk and then diversified into a new area-environment protection space HOV Environment Solutions Private Ltd.
CVCI is the PE segment of Citigroup. More than $7 million worth of assets are being managed by the company all over the world. The firm has slowed down after being active during the bull-run of 2005-08.