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CVCI buying out Apollo Global from BPO firm SourceHOV

25 March, 2013

Citi Venture Capital International (CVCI) is buying out Apollo Global Management and other unnamed minority shareholders in business process outsourcing firm SourceHOV for an undisclosed amount.

US-based SourceHOV was formed a couple of years ago with the merger of HOV Services LLC, an indirect subsidiary of HOV Services Ltd with Sourcecorp, Inc., a portfolio company of Apollo.

SourceHOV, with approximately $525 million in revenue, 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.

The company counts over 12,600 employees operating from over 80 delivery centres in six countries including the US, Mexico, Canada, India, China and the Philippines.

This comes as yet another large PE deal in the BPO industry. Last year, in a big ticket deal, Bain Capital joined hands with Singapore’s sovereign wealth fund GIC to buy a large stake in Genpact for $1 billion.

Credit Suisse served as financial advisor to Apollo in connection with the transaction.


Although the deal size was not disclosed, benchmarking it against NYSE-listed Genpact, the CVCI-Apollo deal would run into hundreds of millions of dollars.

Genpact is currently trading around 2x its revenues. But, Genpact has been a fast growth firm and has grown its topline by around 50 per cent in the last two years. In contrast, SourceHOV has seen its revenues grow just a shade below 10 per cent in the same period.

When HOV Services LLC was merged with Sourcecorp, the combined entity had annual revenues of around $481 million and over 14,000 people on board. This also means the combined entity right-sized post-merger.

At the time of merger in May 2011, HOV Services and Sourcecorp shareholders became 50:50 owners of the merged entity. However, HOV’s holding had shrunk to 27.2 per cent as of December 31, 2011.

As per a previous disclosure, the merged entity had secured $625 million from a consortium of banks led by UBS, Credit Suisse and Jefferies to refinance its existing debt and working capital requirements.

Previously, PE major Apollo had taken Sourcecorp Inc private in a deal worth $475 million. Sourcecorp was a Dallas-based BPO and consulting services company.

HOV & HandsOn

HOV Services is one of the portfolio firms of HandsOn Ventures, a Santa Monica-headquartered private equity firm set up in 2001, which has more than $800 million of assets under management. HandsOn manages multiple funds and investments in partnership with investment banks, private equity groups and global financial institutions. Its main focus is on acquiring assets in US and emerging markets.

According to its website, it has Rustic Canyon, LLC (over $100 million acquisition fund jointly owned with Merrill Lynch, Inc. focused on small size investments in BPO and financial services sectors); HandsON Fund, LLC (its maiden fund which is being wound down) and HOV Clean Energy, LLC.

HandsOn counts Par Chadha (technology entrepreneur and former CEO of Osicom Technologies), Sunil Rajadhyaksha (co-founder of Codec, which was acquired by HOV), Surinder Rametra (founded Sun Computers and Software, Inc. and took the company public in 1994 under the name ATEC) and Xin Cheng (earlier launched Sorento Networks) as founding members.

The investment firm’s key Indian portfolio company HOV Services went public in late 2006 and its main revenue driver was the BPO unit. Post-merger with Sourecorp, HOV Services became a small firm and diversified into environmental protection space through a newly created indirect subsidiary, HOV Environment Solutions Private Ltd.

This unit aims to design and develop solutions for problems related to erosion control, soil stabilisation, environment conservation and construction in infrastructure projects as well as in the application sectors of roads, railways, rivers, channels, landfills, coastal protection and civil construction.


The PE arm of Citigroup, which manages over $7 billion in assets worldwide, was one of the more active investors in India during the bull-run (2005-08). CVCI had gone slow since then, but this is the second such India-related deal in an overseas firm within a year.

Last August, it invested $137.75 million (Rs 764.66 crore) in travel operator Cox & Kings Ltd’s subsidiary Prometheon Holdings (UK) Ltd. This was one of its single biggest bets in an India-related portfolio.

Given the estimated value of the latest transaction in SourceHOV, it might have trumped the previous investment in size.

Previously, in June 2011, it had led a third round of funding worth Rs 65 crore in Bangalore-based microfinance institution Janalakshmi Financial Services.

Also Read

HOV Services Arm Merges With SourceCorp; Lands $625M Funding

(Edited by Prem Udayabhanu)

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CVCI buying out Apollo Global from BPO firm SourceHOV

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