Blackstone-backed BPO firm Intelenet Global, in which Barclays is buying minority stake after exiting the firm few years ago, has offered to take stock exchange-listed outsourcing firm Sparsh BPO Services Ltd private paying Rs 80 per share to buy the 25.06% it does not own. Intelenet along with its holding company SKR BPO Services Pvt. Ltd owns the majority stake in loss making Sparsh.
The offer price is approximately 41.2% above the price determined as the average of the weekly high and low of the closing prices of the company’s scrip, during the 26 week preceding the date when the delisting proposal was considered. Sparsh BPO share price hit the circuit limit before coming down moderately and is currently trading at Rs 83.35 a share, giving it a market cap of Rs 134 crore.
At the offer price, a 25% stake will cost Intelenet-SKR BPO around Rs 32 crore ($7 million).
This comes close on the heels of Barclays announcing that it is picking a 12% stake in Intelenet, marking a return to the company as an investor. The British Bank, that is already one of the largest clients of the firm, is said to be picking fresh shares in SKR BPO Services.
Barclays and Housing Development Finance Corp (HDFC), had sold their stake to Blackstone in a management buyout for $200 million and have bought back into the company. Blackstone held 80% stake while the remaining 20% was with the management after the MBO was concluded in 2007. Post Barclays transaction, Blackstone will own 66.25% while the management will have a 16.5% holding. HDFC now holds a 4.5% stake.
HDFC along with Tata Consulting Services (TCS) had set up Intelenet as a 50:50 joint venture back in 2000. But HDFC acquired TCS’ 50% stake in Intelenet for Rs 161 crore in July 2004 and sold it a month later to Barclays for Rs 164 crore.
Intelenet is taking Sparsh BPO private even as there are reports that it may itself go public. A Reuters report said the firm may look at raising funds in an initial public offering in 1-2 years.
This will be the second such deal where a private equity (PE) firm or a PE backed firm is taking a company private, a phenomena which is quite common in the developed markets but largely absent in India. Actis is in the process of acquiring a part of the business of its own portfolio company Halonix. While Halonix is a listed company, Actis is buying out the low margin general lighting business leaving the listed firm with profitable automotive lighting business.
The strategy behind this could be to improve operations and make it a financially stronger firm at a private level before looking to sell it out to a strategic buyer in the future.