Is Blackstone-controlled BPO firm Intelenet Global Services close to unveiling a business transaction, which would also see it diluting a small stake to the client?
Sources familiar with the development said, Intelenet may be sewing up a large multi-year business-cum-equity deal with one of its large clients who could pick up to 5% stake in the company. Intelenet is in the final stages of going public on this strategic initiative. There is no clarity whether this will be a new client, or an existing one ramping up its work significantly.
Blackstone had acquired Intelenet in 2007 through a management buyout for $200 million from Housing Development Finance Corp (HDFC) and Barclays, both of whom owned a 50% stake each. While private equity fund took an 80% stake in the firm, the rest was held by the management of Intelenet. But interestingly, HDFC ended buying back around a 5% stake Intelenet sometime last year.
In context, there is speculation that UK-based banking major Barclays could also be buying back into Intelenet with larger outsourcing work. However, VCCircle could not confirm this independently. Barclay Plc's unit Barclays Card recently awarded a five-year outsourcing contract worth $100 million to rival BPO firm Firstsource Solutions Ltd.
An e-mails to Intelenet remained unanswered at the time of posting the report. "As a policy, Blackstone does not comment on market speculations," said a Blackstone spokesperson when contacted by VCCircle.
Several Indian information technology exporters have, in the past, issued equity shares to their key clients. Metavante Technologies holds a 18.21% stake in BPO firm Firstsource Solutions, which also is its offshoring partner. Global telecom majors British Telecom and AT&T, who are major clients of Tech Mahindra, also hold a significant stake in the firm.
In August this year, an arm of undisclosed telecom firm also picked up a stake worth Rs 64 crore in Subex Ltd, a provider of operations and business support systems in the telecom space.
Intelenet has completed several acquisitions since the MBO. It acquired Upstream and Travelport ISO in 2007 for $75 million. More recently it acquired the back office operations of FirstGroup Plc, which is UK’s largest bus operator, for $67 million in March this year. Intelenet has also bagged outsourcing contracts from Blackstone global portfolio firms during the last three years.
HDFC, along with Tata Consulting Services (TCS) had set up Intelenet as a 50:50 joint venture back in 2000. But HDFC acquired TCS's 50% stake in Intelenet for Rs 161 crore in July 2004 and sold it a month later to Barclays for Rs 164 crore.