Public listed investment and business services organisation HOV Services Ltd (HOVS), a portfolio company of Santa Monica-headquartered private equity firm HandsOn Ventures, is selling its 26.1 per cent stake in US-based business process outsourcing associate firm SourceHOV Holdings Inc to HandsOn Fund 4 LLC for $95 million as per a stock market disclosure.
The deal, which is subject to requisite approvals, is part of a larger deal where SourceHOV is merging with HandsOn-controlled BancTec.
SourceHOV is a mid-size BPO and KPO firm serving customers in more than half of the Fortune 100 companies with domain expertise in document centric applications in healthcare payers and providers, finance and banking, public sector, publishing, legal, insurance, manufacturing and commercial industries, including specialised consulting services for construction management, tax benefits, legal claims settlements and economic consultancy.
It was formed three years ago with the merger of HOV Services LLC, an indirect subsidiary of HOVS, with Sourcecorp, Inc., a portfolio company of Apollo Global.
Last year in March, Citi Venture Capital International (CVCI) invested in the SourceHOV and bought all the stake of affiliates of Apollo Global Management, LLC and other unnamed minority shareholders in SourceHOV.
Early this week, SourceHOV said it has agreed to a deal to merge with BancTec Group, to create one of the largest transaction processing service providers worldwide. Both SourceHOV and BancTec are headquartered in Dallas, Texas, and the combined company is projected to have annual revenues in excess of $900 million.
The transaction value was not disclosed but based on the deal where HOVS is selling out, SourceHOV is valued at around $364 million.
In the transaction, stockholders of BancTec will receive stock in SourceHOV, and SourceHOV will use a new $1.1 billion credit facility to refinance existing indebtedness, redeem certain existing SourceHOV equity holders and provide additional working capital. It did not disclose which existing investors shares would be redeemed and if CVCI is exiting the venture.
Founded in 1970, BancTec provides financial transaction automation and document management services. The firm employs over 4,000 people across 35 offices and operating centres globally.
In February this year, HandsOn, which manages several global buyout funds and has investments in business process services, entered into a definitive agreement to acquire BancTec.