Filipino BPO, Blackstone in final race to acquire Serco India

Private equity giant Blackstone and Filipino business process outsourcing (BPO) company SPi Global remain the front runners for buying London-listed Serco's Indian BPO unit. In its final stages, the deal for Serco India BPO is learnt to be in the range of $400 million.

Formerly known as Intelenet, it had been sold by Blackstone to Serco for $634 million in 2011. If Blackstone wins the bid, it would be re-entering the BPO business. SPi Global, owned by US private equity firm CVC Capital Partners, is already present in India.

Intelenet was set up in 2000 as a 50-50 venture between HDFC and Tata Consultancy Services (TCS). In 2004, HDFC acquired TCS' stake for Rs 160 crore, to sell it to Barclays later. In 2007, Blackstone bought an 80 per cent stake in Intelenet for about $260 million. When it sold Intelenet in 2011, Blackstone had a 66 per cent stake, and the rest was divided among Barclays, HDFC and the management team. Blackstone had managed to get more than a 60 per cent return on its four-year investment.

Serco had announced in November last year the future strategy for the company would be to focus on being a business-to-government service provider across five core areas and four key regions. As part of this, Serco had said it would be looking at a number of divestments including its private sector BPO business.

A Serco spokesperson said, "This is a good business with highly capable people but does not fit with the future strategic direction of Serco and will find a better home with a new owner. The divestment process is ongoing and we are not going to comment on the detail of the process." A Blackstone spokesperson said the company did not comment on media speculation. An email sent to SPi Global remained unanswered.

SPi Global, a leading diversified BPO service provider in the Philippines, operates an offshore-based model primarily serving US and Europe customers with more than 20,000 employees across 17 delivery locations in six countries, including India, the US, China, Vietnam and Nicaragua. In 2013, Philippine Long Distance Telephone Company sold its subsidiary SPi Global Holdings to Asia Outsourcing Gamma, controlled by CVC Capital Partners.

In India, the BPO division of Serco comprises erstwhile Intelenet, Sparsh BPO and Serco's own units, with a combined workforce of about 30,000 across 43 delivery centres in 21 cities.

In April 2012, Serco Group had brought all its BPO assets together to create Serco Global Services. Serco's BPO operation is the third largest in India, after Genpact and TCS.

BPOS: INDIA TOP 3
Rank 1
GENPACT
Workforce
68,000

Rank 2
TCS
Workforce
45,000

Rank 3
SERCO INDIA
Workforce
30,000

TIMELINE

• In 2000, Intelenet formed as 50:50 JV between HDFC, TCS
   
• In 2004, HDFC bought TCS' stake
   
• In 2007, Blackstone bought 80% stake for $260 mn
   
• In 2011, Blackstone sold Intelenet to Serco for $634 mn
   
• In 2015, Blackstone, SPi Global bid for Serco's Indian business