CVC Capital Partners, a global private equity house managing $71 billion in funds, has emerged the preferred bidder to acquire the Indian unit of business process outsourcing (BPO) major Serco Plc, valued at about $400 million, or Rs 2,500 crore, multiple people familiar with the matter said.
CVC Capital and world's largest private equity manager Blackstone Group had fired binding offers to acquire Serco's Indian operations (formerly Intelenet) last month. Blackstone was making a strong bid to buy back Intelenet which it sold to Serco for $634 million four years ago, TOI reported in February this year.
In context, CVC Capital's emergence as preferred bidder is surprising given that Intelenet still garners almost 15% revenue from some Blackstone portfolio companies like Hilton Hotels and Travelport. "CVC Capital is clearly the top bidder to clinch the deal, though Blackstone remains in the fray," one of the sources cited earlier in the report said.
Senior executives from CVC Capital and its portfolio company — Philippines largest BPO company SPi Global —were in India recently to conduct due diligence on Intelenet's centers and interact with the management. "We do not comment on transactions," Serco Plc spokesperson Marcus Deville said in an emailed response. CVC Capital Partners could not be reached for immediate comments.
Sources said CVC Capital is exploring the possibility of merging Serco's Indian unit with SPi Global to expand its footprint in India and the UK. The bid for Intelenet comes almost two years after it acquired Philippines' largest BPO company SPi for over $300 million. This deal will be CVC Capital's their first big bet on the Indian market, if they close the transaction without hiccups.
SPi operates an offshore-based model primarily serving US and Europe-based customers with more than 20,000 employees worldwide across 17 delivery locations in six countries including the Philippines, India, US, China, Vietnam and Nicaragua. It also operates a voice customer relationship management (CRM) business servicing both domestic and international customers.
Serco runs India's third largest BPO operations after Genpact and TCS, employing over 40,000 people. It caters to customers in banking and financial services, insurance, retail, travel, telecom, healthcare, utilities and media. In November last year, Serco had announced it would divest private sector BPO businesses as part of a business restructuring plan that would see it focus on being a business to government providers across five core areas. The sale proceeds would be used to lower the net debt of the parent company.