Mergers and Acquisitions in BPO World – 2008

AcquireeAcquirer / VCValueDateReason For Acquisition
WNSPE fund Nalanda India$32-34 million for 5.25% stake [2.2 million shares]March 2008WNS is the second Warburg portfolio firm where Nalanda India, the India fund of Singapore-headquartered private equity fund Nalanda Capital, is known to have invested. The $400-million fund, which has a mandate to invest only in publicly-listed companies, had picked up a 14.9% stake in Jaipur-based Vaibhav Gems.
RSM McGladreyQuatrro$50 millionApril 2008McGladrey_x0012_s has some $18 million in billings and its 600 or so staffers, including 200 in the U.S. Quatrro has 1600 employees
QuatrroJohn Keells Holdings (JKH)$5.72 million for 44% stakeApril 2008A new legal entity has been carved out from the merger of Quatrro’s own finance and accounting practice and RSM_x0012_s FPO unit. John Keells has picked up 44% stake in this new entity
Babel MediaQuatrro$100-125mJune 2008As part of the transaction, which is being funded by DE Shaw, the New York-based investment group is picking a minority stake of around 5-10 per cent in Quatrro for an undisclosed sum. Besides this, DE Shaw will also hold a minority stake in Babel and will provide leverage finance for the acquisition. Quatrro will hold a majority stake in the UK-based firm.
Aviva Global ServicesWNS$230mJune 2008Acquired Aviva Global Services, the UK-based insurance giant’s captive BPO in India and Sri Lanka, for $230 million. WNS has beaten Aviva’s other vendors EXL and 24/7 Customer to clinch the deal. The deal will also see WNS securing UK-based insurance giant Aviva’s committed $1 billion outsourced work over an eight-year period.The buyout will bring over 6,500 employees of Aviva Global Services spread across Bangalore, Pune, Noida, Chennai and Colombo under the WNS fold.
En Pointe Global ServicesAllied Digital Services80% for $24mJuly 2008The deal gives Allied Digital access to a ready customer base for remote infrastructure management services and a base in the US to expand its presence.
PeopleSupportAegis Communication Corp$250mJuly 2008This is Essar’s 11th BPO acquisition since 2005. PeopleSupport has annual revenues of around $141 million and Aegis, which is unlisted, has revenues of $320 million. The acquisition gives Aegis a sizeable presence in Philippines, which is a key region for BPO players servicing the US market, as well as presence in Costa Rica. The Costa Rica facility gives it a nearshore presence to US. Aegis gets about 8,500 employees from the acquisition.
Control Point SolutionsHCL Tech BPO$20.8mAugust 2008Control Point Solutions is a privately-held voice, data & wireless telecom expense management (TEM) service provider. Under the deal, HCL will acquire four delivery centres in US with over 200 professionals. The strategic acquisition of Control Point Solutions is in line with HCL BPO_x0012_s goal to make strategic, platform-based acquisitionswhich give us sustainable competitive advantage in chosen verticals. This acquisition enhances HCL_x0012_s ability to become an end-to-end provider of business process outsourcing services in the attractive TEM space
Cambridge SolutionsXchanging PLC£83 million (Rs 686.84 crore) – Rs 371.2 crore in cash and issue 15,249,998 New Xchanging Shares. The New Xchanging Shares amount to 7% of the Company’s current issued ordinary share capital.Oct 2008The addition of Cambridge Solutions to Xchanging delivers greater scale, broader international reach and a number of platforms for significant future growth. In particular, the Acquisition brings the following strategic advantages:

1. processing capabilities and a strong market presence in the USA, which can serve as a springboard for future growth;

2. the addition of scale to Xchanging_x0012_s Indian BPO platform and the creation of offshore critical mass;

3. the addition of a strong Australian business and a platform for Xchanging_x0012_s growth in the region;

4. the addition of scale and the enhancement of the Xchanging Group_x0012_s IT capabilities; and

5. the opportunity to create a truly international insurance processing business with significant combined revenues.
Citigroup Global Services (CGSL)TCS$505 mOct 2008This deal marks the largest buyout of a foreign captive BPO in India. The largest captive BPO acquisition till date was WNS’s take over of Aviva BPO for $230 million. Citigroup BPO handles services such as credit cards, consumer finance, retail banking, capital markets & banking as well as global transaction services.The Citi BPO has EBIT margins of 20% and is expecting the revenues to touch $278 million this year. The transaction is expected to be closed by last quarter of FY08. Merrill Lynch was the advisor to TCS on the deal.TCS said in a statement that the acquisition will broaden its portfolio in the end-to-end IT and BPO services in the global banking and financial services sector. TCS said that it will leverage on capabilities of Citi BPO to serve large global banks.
Fidelity InvestmentsEXL Service Holdings$10m for additional 6.77% stake, total of 21.77%Nov 2008Analysts say it makes good sense for investor to look at IT & BPO firms due to the drop in their valuations. Earlier valued at four times their revenue or 14 times their operating profits, these firms are now trading at half those multiples. As per the last disclosed shareholding pattern of EXL prior to this transaction, Oak Hill Strategic Partners held a 36.5% stake in the BPO firm, followed by Fidelity (15%). BlackRock Financial Management is the other leading shareholder with an 8.2% stake. Founders Rohit Kapoor and Vikram Talwar hold 6.9% and 6.2% respectively.
InfoVisionSerco Group$75m / Rs 240 croreNov 2008InfoVision group has about 10,000 personnel and 60 clients. Serco, which offers a whole spectrum of support services but did not have a presence in the BPO space prior to the InfoVision acquisition, plans to have a workforce of 20,000 in the next 2-3 years.
Citi Technology Services Ltd (Citos)Wipro$127mDec 2008The cash deal would allow Wipro to get $500 million worth of assured business in software services and infrastructure 

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