Essar Group firm AGC Holdings will sell its BPO business in the US, the Philippines and Costa Rica to Paris-based outsourcing firm Tele-performance for USD 610 million (about Rs 3,638 crore).
AGC Holdings, a wholly owned portfolio company of Essar Global Fund has entered into a definitive agreement with Tele-performance to sell Aegis USA Inc (AUI), which has annual revenues of USD 400 million and employees over 19,000 across 16 centres in 3 countries, the company said in a statement.
It serves clients in the US market across industries like healthcare, financial services, travel and hospitality. The transaction is expected to close during the third quarter of 2014, subject to receipt of certain regulatory approvals and other customary closing conditions.
Aegis will continue to retain the remainder of the BPO business globally across India, Sri Lanka, Malaysia, Australia, South Africa, Peru, Argentina, Saudi Arabia and UK, it added. According to IT-BPO industry body Nasscom, Aegis is ranked as the fourth largest BPO company in India in terms of revenues after Genpact, TCS BPO and Serco.
"This transaction fits the strategic objectives of Essar Fund in the rapidly growing high quality assets and delivering value creation, in this case through a sale to a high quality strategic player in Tele performance," Uday Gujadhur, Board Member of Essar Capital Ltd and fund manager for Essar Global Fund Limited, said.
He added the transaction would yield many synergies and benefits for Aegis' employees and customers. "We look forward to continue to grow the Aegis portfolio in our other markets including India, Malaysia, Australia, Middle East, Europe and Latin America," he said.
Essar made a foray into the BPO business through the acquisition of Aegis Communication Group, US in 2004. Post transaction, Aegis would have operations in 37 locations across nine countries with more than 37,000 employees. Its clients would include players from verticals like Banking and Financial Services, Insurance, Technology, Telecom, Healthcare, Travel & Hospitality, Consumer Goods, Retail, and Energy and Utilities. "With this transaction, we will boost Tele-performances
US market share, adding USD 400 million to our annual revenue, for a total of USD 4 billion in worldwide revenue on a pro-forma basis," Tele performance Executive Chairman Daniel Julien said.
The deal will significantly strengthen the company's presence in the healthcare, financial services, travel and hospitality verticals in the US, thereby continuing to accelerate the diversification of business portfolio, he added.
The deal will create immediate value for Tele-performance shareholders as it will be accretive to earnings per share by above 10 per cent starting from 2015, with consolidated EBITA margin exceeding 10 per cent," he said.
In 2013, Tele-performance reported consolidated revenue of about USD 3.23 billion. Before the deal, the group had close to 149,000 employees across around 230 contact centres in 62 countries and serving more than 150 markets.
Also read: Aegis Logistics fixes book closure for final dividend, AGM
In the last few years, the BPO space has witnessed quite a few big ticket deals. In September last year, Synnex Corporation announced the acquisition of IBM's worldwide customer care business process outsourcing services business for USD 505 million, which was integrated with its subsidiary Concentrix
.
In January this year, The Aditya Birla Group sold its Canada-based business and technology outsourcing arm, Aditya Birla Minacs Worldwide, to private equity investors, for a reported Rs 1,600 crore.
In May 2011, Services and consulting firm Serco signed an agreement to acquire Indian BPO company Intelenet for up to GBP 385 million (Rs 2,772 crore). The deal was completed in 2012.
