Mumbai-based business process management firm Firstsource Solutions Ltd said on Thursday it has agreed to acquire US-based ISGN Solutions Inc and the BPO business of ISG Novasoft Technologies Ltd for around $12.6 million in cash.
The acquisition will mark Firstsource's entry into the US mortgage processing market, the company said in a statement to stock exchanges.
ISGN Corp, ISGN Solutions Inc, ISG Novasoft Technologies are subsidiaries of CFCL Technologies Ltd, which in turn is an arm of Chambal Fertilisers and Chemicals Ltd. Chambal Fertilisers is part of Saroj Kumar Poddar-led Adventz Group.
With offices in the US and Bangalore, ISGN Solutions provides BPO services to financial institutions that focus on the US residential mortgage market.
Sanjiv Goenka, chairman of Firstsource, said in the statement that ISGN's knowledge in the mortgage outsourcing space and its set of marquee customers provide the Indian company significant opportunities to cross-sell capabilities and leverage its global relationships.
The acquisition is expected to be completed in two to four months’ time, subject to customary closing conditions.
Firstsource is paying $12.56 million for the US company and Rs 3 crore ($440,000) for ISG Novasoft’s BPO business. The US company’s revenue has more than halved in the last three years. It posted revenue of $25.9 million for 2014, compared with $55.3 million the year before and $60.7 million in 2012, according to the statement.
Firstsource caters to companies across telecommunications and media, financial services, healthcare and publishing industries.
Kolkata-based RP-Sanjiv Goenka Group had acquired a controlling stake in Firstsource through a mix of subscription to fresh issue of shares and stake purchase from existing investors including Singapore’s sovereign wealth fund Temasek in 2012. After this acquisition, Firstsource made a strategic investment in Bangalore-based analytics company NanoBi.
Firstsource claims it has about 100 global clients from multiple delivery centres and in various languages. It has about 30,000 employees in India, the Philippines, Sri Lanka, the US, Ireland and the UK.