Fairfax-controlled Quess Corp files for $60M IPO

Business services provider Quess Corp has filed its draft red herring prospectus to raise Rs 400 crore (just under $60 million) through its initial public offering (IPO).

In the process, it joins a queue of eight other firms awaiting a green signal from capital markets regulator Securities and Exchange Board of India for their public issues while over two dozen firms are already waiting to go public.

Quess, earlier known as IKYA Human Capital Solutions Ltd, is the second firm to file for IPO this year after Advanced Enzyme Technologies.

The company had said in March last year that it was evaluating various funding options, including an IPO. If it goes ahead with the public issue, it would make it the second listed firm for Canada's Fairfax Financial Holdings in India.

Its parent Thomas Cook is already a listed firm.

Here's a snapshot of the company and the issue:

* Size: Issue comprises only a fresh share sale to mop up Rs 400 crore.

* Bankers: Axis Capital, ICICI Securities, IIFL and Yes Securities.

Objects of the issue

The firm plans to use the money for repayment of debt (Rs 50 crore), capital expenditure of the holding company as well as American arm MFX (Rs 70.68 crore); incremental working capital requirement (Rs 157.9 crore); acquisitions and other strategic initiatives (Rs 80 crore), besides other purposes.


IKYA was founded by serial entrepreneur Ajit Isaac, who sold PeopleOne Consulting to Swiss staffing giant Adecco in 2004. It was acquired by travel and tour company Thomas Cook in early 2013 for Rs 256 crore. The deal marked an exit for India Equity Partners, which invested in IKYA back in 2008. It was rebranded as Quess earlier last year.

Originally, it was essentially a staffing services firm but with a string of acquisitions, especially after it came under Thomas Cook, it expanded aggressively and now provides solutions including recruitment, temporary staffing, IT products and solutions, skill development, payroll, compliance management, integrated facility management and industrial asset management services.

A majority of its business (55 per cent) comes from its people and services unit, followed by global technology solutions (28 per cent), facility management (12 per cent) and industrial asset management (5 per cent).

Headquartered in Bengaluru, it has a pan-India presence with 43 offices across 24 cities, as well as operations in North America, the Middle East and Southeast Asia. As of November 30, 2015, it employed about 118,000 employees, including almost 3,000 core employees and 115,000 associate employees, i.e. employees placed with its clients. As of September 30, 2015, it had nearly 1,300 clients, based on ongoing contracts.

It has been aggressively building its business inorganically over the past two years. Most recently, in October 2015, it entered into a definitive agreement to acquire Randstad Lanka, a company that offers staffing and human resource solutions in Sri Lanka. In December, it acquired the entire beneficial interest in the profits and net assets of Styracorp and IME Consultancy from MS Vishwanathan, who had acquired these two entities from Quess Corp founder Ajit Isaac. It has also increased shareholding in MFX from 49 per cent to 100 per cent last month.

The firm raised some funding through a rights issue and this week entered into an agreement with CPI Engineering Services Sdn Bhd to set up a joint venture in Malaysia to expand industrial asset management business. Quess proposes to have a 49 per cent shareholding in such entity.


The company's revenue rose almost 10 times from Rs 275 crore in the year ended March 31, 2011, to Rs 2,567 crore for the 15-month period ended March 31, 2015. In the same period, its net profit shot up from Rs 1.7 crore to Rs 67.7 crore. Its revenue for the first half of this financial year was Rs 1,532 crore with net profit of Rs 34.8 crore.

The company was valued at just around six times its EBITDA when it was snapped by Thomas Cook. Based on annualised operating profit for this year and same EBITDA multiples, it could command a valuation of around Rs 900 crore, back-of-the-envelope calculations show. However, it may look to push for a higher valuation given its fast-clipped growth down the years.

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