Business Services Sector Comment – August 2016 – BPO

July saw an example of cross-border deal activity in the BPO market as Japan-based Outsourcing Inc. (OSI) acquired Liberata UK Ltd.

Private equity firm Endless LLP successfully exited Liberata UK to Outsourcing Inc. (OSI), a global outsourcing and staffing provider, for an equity value of €50m. Liberata is a leading provider of business process outsourcing and on-demand, digital and transaction services through its CapacityGrid and Liberata Automation Services brands to the public sector. The deal builds on the acquisition of debt enforcement and data analytics service provider JBW Group Limited completed in April 2016 and bolsters OSI’s strategy of becoming a leading provider of services to the government.

The acquisition reflects a growing trend for Japanese staffing firms to broaden their service offering and to internationalise their operations at a time when Japan’s GDP growth remains flat and the country faces a severe demographic crisis. It is also worth noting that the devaluation of the pound by approximately 14% following the Brexit referendum may be a further driver behind Japanese companies targeting the UK market.

Cross-border transaction levels in the BPO sector continue to remain high with leading providers turning to M&A to acquire onshore assets as clients increasingly seek providers who understand local culture, possess specific market knowledge and operate in the same time zone. Additionally, with a number of the largest offshore BPO players being based in India, a market that is undergoing significant change due to rising wage costs, international M&A remains high on the radar for these groups. Recent examples include Infosys’ €110m acquisition of UK-based Kallidus and Tech Mahindra’s recent purchase of Target Group.

At Clearwater International, we fully expect high levels of deal volumes in the BPO market to continue. We are aware of a number of both onshore and offshore providers seeking platform opportunities in new markets as well as in-fill acquisitions that service specific verticals such as customer service and finance & accounting.


Notable Deals

Busy Bees Nurseries Limited, the UK-based company engaged in providing childcare and education services, has acquired Positive Steps Children’s Day Nursery Limited, for an undisclosed consideration.

An undisclosed bidder has acquired Milkround Online Ltd., the UK-based online recruitment company, from News UK & Ireland Ltd (News UK), the UK-based company engaged in publishing newspapers, for an undisclosed consideration.

Vespa Capital LLP, the UK-based private equity firm, has backed the re-capitalization of Chase Search and Selection Limited, the UK-based company engaged in providing contract sales organization solutions and specialist recruitment services to pharmaceutical, biotech and healthcare customers. Clearwater International advised Chase Search and Selection Limited on the transaction.

Charles Taylor Plc, the listed UK-based company offering consultancy, management and problem-solving services to the insurance, energy, transportation and distribution industries, has acquired CEGA Group Limited, the UK-based company engaged in providing airport ambulance, travelling risk and claims, for a consideration  €35m.

Adare Group Limited, the UK-based provider of marketing and customer communications solutions, and a portfolio company of Endless LLP, the UK-based private equity firm, has acquired Polestar Applied Solutions Limited (PAS), the UK-based highly secure mailing services company, for an undisclosed consideration.

Restore Plc has agreed to acquire PHS Data Solutions from PHS Group Limited for a consideration of €96m.

Mercia Group Ltd., the UK-based provider of training and support services to the accountancy profession and a subsidiary of Wilmington Group Plc, has acquired SWAT Group Limited, the UK-based provider of training and technical compliance support to accountancy firms in London and the South West of England, for a consideration of up to €6.3m.

Convergys Corporation has agreed to acquire buw Management Holding GmbH, Germany’s largest independent business process outsourcing provider. Convergys has agreed to pay cash consideration of €123m to the vendors.

Adecco Finland Oy, provider of staffing and related human resources solutions, has acquired Sihti Oy, the Finland-based company providing staffing solutions, for an undisclosed consideration.

Independent Clinical Services Limited, the UK-based company engaged in providing temporary nursing staff, and a portfolio company of TowerBrook Capital Partners L.P.,  has acquired Liquid Personnel Limited, the UK-based social work recruitment consultancy and suppliers of agency social workers. Clearwater International advised Liquid Personnel on the transaction.