Back-office company Intelenet Global Services is all set to have a new promoter in UK-based Serco Group. This is the third set of owners the company will have since its inception 10 years ago.
Serco will acquire 100 per cent stake in Intelenet from Blackstone Group, Barclays and other shareholders for up to £385 million (Rs 2,856 crore) as part of its strategy to strengthen tentacles in high growth markets.
Moreover, the acquisition will enable the £4.3-billion Serco - better known as a government services company - to enhance its bouquet of business from private sector clients.
India focus
Intelenet will be combined with Serco BPO, the erstwhile Infovision which was acquired by the company in 2008 for $75 million. Serco BPO has around 8,000 people and is completely focused on the Indian domestic market.
Mr Tom Riall will be the Executive Chairman of the new combined entity which will have 40,000 employees across seven countries.
“The acquisition of Intelenet will add to our scale and depth of capabilities. Intelenet brings a wealth of expertise in a broad range of middle and back-office services, and its existing management team will continue to lead the business and drive it forward, supported by a small number of Serco senior leaders,” Mr Riall, said in a conference call with newspersons.
Intelenet generates three-quarters of its $170 million revenues (for the year ended March 31, 2011) from international back-office work with the remaining coming from the domestic Indian business.
Intelenet was founded in 2001 as a joint venture between Tata Consultancy Services and HDFC. In 2007, a management buy-out was completed, resulting in the business being majority owned by private equity company Blackstone Group, together with Barclays, HDFC and Intelenet's management team.
“We have gone through three rounds of investor changes in the past…we are hopeful there were wont be any more (investor changes) in the future,” Mr Susir Kumar, Chief Executive Officer of Intelenet, said.
Intelenet offers its global customers middle and back-office services including transactional, process and voice support, finance and accounting services, and business transformation consulting such as process redesign and reengineering.
Acquisition cost
The overall consideration of £385 million includes contingent cash payments of up to £50 million through to December 2013. These are dependent principally on the delivery of additional revenue to Intelenet from Blackstone portfolio companies and Barclays, according to a press statement.
The acquisition cost, depending on the level of contingent payments, represents a multiple of 17.6 to 20.3 times adjusted operating profit and 10.5 to 12 times EBITDA for the year ended March 31, 2011. The acquisition is expected to be accretive to earnings in the first year of full ownership.