Fairfax Holdings-backed Quess Corp. has agreed to acquire the facility management and catering business of Manipal Integrated Services Pvt. Ltd (MIS), the company told the stock exchange.
Quess is paying Rs 220 crore for the transaction, the company said, although there is also an additional stock component.
After MIS, the facility management arm of Manipal Education and Medical Group (MEMG), is merged into Quess, 7.15 million shares will be issued by Quess to MEMG, the company said.
According to an earlier Economic Times report, this translates to a 5% stake in Quess.
“The acquisition helps build our facility management capabilities in non-cyclical sectors like healthcare and education,” Ajit Isacc, chairman and CEO of Quess Corp said.
The investment will be margin accretive, the company said.
For MEMG, this will be a non-core divestiture. Quess has agreed to provide facility management services to the MEMG group for a minimum of five years, the company said.
“With this announcement, we have taken a step further in sharpening focus on our core businesses of healthcare, education and research,” Dr Ranjan Pai, MD and CEO of MEMG said, noting that this transaction was the best strategic outcome for the facility management business.
MIS has a headcount of 17,000 and 120 clients and the deal is expected to add about Rs 425 crore to Quess’ topline in March 2017, the statement said.
Established in 2007 in Bangalore, Fairfax Holdings controlled Quess Corp. (earlier IKYA Group), recordedthe highest investor interest in Indian IPOs in eight years, as reported by VCCircle earlier.
The firm has acquired 10 companies since 2010. In an exclusive interview with VCCircle soon after its listing, Ajit Isacc said, “We are biased towards value-based investing where we see a clear payback within three-five years of our investment. Transformative deals are larger and hence rarer. A string of pearls strategy has worked well for us in the past and is easier to integrate and grow. We are open to looking at larger deals as long as they fall within the deal parameters we have established for ourselves.”
Isaac said that segments such as payroll, compliance, finance and accounting and security services are areas which would be of interest to the company for an acquisition.
In another deal in this space, CX Partners-backed Security and Intelligence Services (India) Ltd (SIS), a New Delhi-based security solutions and business support services provider acquired facility management company Dusters Total Solutions Services Ltd.
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