Private equity’s love for the BPO sector…
Last month saw global services group Serco plc dispose of its offshore private sector BPO arm (mainly the former Intelenet business) for a gross consideration of €338m.
Serco, which has been in crisis since the tagging scandal came to light in July 2013, put the business up for sale in November 2014 as the group attempted to restore an ailing balance sheet and recalibrate its strategy to focus on public services. Intelenet, which employs 52,000 people and is the third largest BPO company in India, provides accounting services to the financial, telecoms and travel industries. The business was forecast to generate revenue of €318m and EBITDA of €48m, suggesting an EV/EBITDA multiple of 7.0x. It’s a great story for successful acquirer Blackstone, who previously owned the business up until 2011 when it was sold to Serco for €473m.
The purchase is yet another example of private equity’s appetite for assets in the sector. Drawn to the recurring revenue streams, predictability of cash flows, buy-and-build potential and positive secular trends, private equity houses have snapped up a number of the leading players in the sector. This includes Bain Capital’s acquisition of a minority stake in Genpact and purchase of Atento S.A., CVC Capital Partners buyout of SPi Global Holdings Inc, and Charterhouse Capital Partners LLP’s acquisition of France-based Webhelp S.A.
However, not to be left behind, trade players have also been seizing the opportunity to leverage their strong balance sheets and deploy capital through M&A. For example: Capita recently acquired Switzerland-headquartered Avocis AG for €210m, having previously acquired Ireland-based Southwestern. Other corporates which have been particularly active in the sector include Accenture, who has made a number of acquisitions of analytics providers, and Genpact, who acquired regulatory affairs and compliance services Pharmalink in 2014.
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Notable Business Services Deals
Endless LLP, the UK-based private equity firm, along with management of Imtech UK Limited, the UK-based company engaged in providing mechanical and electrical solutions in construction, engineering services, technical facilities management and systems integration, has agreed to acquire the company in a management buyout transaction.
Outsourcing Inc., the listed Japan-based company engaged in providing human capital services, has agreed to acquire Ntrinsic Consulting Resources Limited (NCRL), the UK-based company engaged in dispatching, and recruiting and placing IT consultants.
Searchlight Capital Partners, L.P., the US-based private equity firm, and Duke Street LLP, the UK-based private equity firm, have acquired an undisclosed controlling stake in Fork Rent Limited, the UK-based company that provides construction equipment rental services.
Searchlight Capital and Duke Street LLP also acquired an undisclosed controlling stake in One Call Hire Limited, another UK-based company that provides construction equipment rental services.
Ricardo plc, the listed UK-based company engaged in the provision of technical and strategic consulting, has acquired Cascade Consulting Holdings Ltd, the UK-based provider of environmental consultancy services to the water sector.
Apogee Corporation Limited, the UK-based company engaged in the design, implementation and support of digital office machinery, has acquired Balreed Digitec Group Limited, the UK-based manufacturer and independent provider of document & print technology and managed services.
EY, the UK-based professional services firm, has acquired Seren Design Ltd, the UK-based digital consultancy company, from Foviance Group Limited.
Servest Group Limited, the UK-based facility services provider, has acquired Llewellyn Smith Limited, the UK-based compliance and consultancy services provider.
Costain Group Plc has acquired UK-based engineering consultancy Rhead Group Limited from Inflexion Private Equity Partners LLP.
Paragon Group UK Ltd, UK-based Company that manufactures and supply business forms, office system machinery and printing services, has acquired Magnadata International Ltd, the UK-based manufacturer of security print products.
Permira Advisers LLP, the UK-based private equity firm, has agreed to acquire a majority stake in Lowell Group Limited, the UK-based company engaged in providing debt recovery, data analytics and customer insight services, from TDR Capital LLP.
JLL, the listed US-based company that offers integrated real estate, investment management services and financial advisory, has acquired bluu International Limited, the UK-based interior design and project management business.
The Manchester College Group, the UK-based company engaged in offering various courses and training services, has acquired Total People Limited, the provider of apprenticeships and work-based training, for an undisclosed consideration.
Cimpress N.V., a listed Netherlands-based online provider of coordinated portfolios of marketing products and services, has acquired Fairprint Distribution Limited (trading as Tradeprint), the UK-based company offering trade printing services.