TeamLease to take over ASAP Info Systems for $10 mn

Staffing service provider TeamLease Services Ltd has agreed to acquire Bangalore-based ASAP Info Systems Pvt. Ltd for Rs 67 crore ($10 million) in a deal that will help it start providing recruitment services to information technology companies.

The deal amount will be paid in cash but 20% of the payment is linked to future earnings, TeamLease said in a stock-exchange filing.

The acquisition of ASAP Info Systems will also help it expand net margin. The deal is likely to be completed before 31 August, it said.

"The transaction, which will be immediately accretive to TeamLease's earnings per share, will be financed with existing financial resources and is expected to close before the end of August 2016," it said.

The transaction will be done through TeamLeases wholly-owned subsidiary TeamLease Staffing Services and subject to customary closing conditions and regulatory approvals.

“This transaction creates an opening balance for TeamLease to build an IT staffing business. The acquisition of ASAP is also consistent with our strategy of margin expansion through new product verticals and client segments,” said Ashok Reddy, managing director of TeamLease Services.

TeamLease, which got listed in February after an initial public offering (IPO) that was heavily oversubscribed, had said in its share sale document that it planned to use part of the proceeds from the IPO for acquisitions.

ASAP Info Systems offers IT staffing solutions to various MNCs and domestic companies with over 1,000 associates and 171 core employees as of date. The company posted revenues of over Rs 63 crore with an EBITDA of around Rs 11 crore in FY2015-16.

TeamLease mainly offers temping services where it provides temporary workforce to its clients in bulk on a contract. This allows clients to hire without adding to their direct employee base. This employment and business model is closely associated with sectors like manufacturing, banking, BPO and retail, among others. However, temping also encompasses senior-level short-term flexi managers. TeamLease also offers permanent staffing services.

Quess Corp, part of Fairfax-controlled Thomas Cook and earlier known as Ikya, is another firm that offers staffing service. Quess Corp also recently raised Rs 400 crore through an IPO recently.

The issue drew subscriptions that were 144.31 times the issue size, registering the fifth highest overall subscription (in percentage terms) for any IPO since 2000.

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