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Intelenet Seen Close To Biz-Cum-Equity Deal With Client

By TEAM VCC

  • 06 Oct 2010

 

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.

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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. 

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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.

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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. 

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