Serco to sell private BPO business; kicks off rights issue

The group would have to raise an additional £500 mn to make up for losses of £1.3 bn, said sources

The UK-based Serco Group on Thursday announced the launch of its rights issue to raise £555 million and said it had initiated talks to sell its private business process outsourcing (BPO) operations.

In filings with the London Stock Exchange, the group said as part of its rights issue it intended to sell secondary businesses to reduce debt.

These include its private BPO operations, Mumbai-based Intelenet and Delhi-based Infovision.

The sale of the BPO business will begin after April 17 when the rights issue closes.

The revenue from Serco’s BPO operations was  £359 million (Rs 3,363 crore) in 2013-14. In 2000, Serco had acquired Intelenet Global Services, a BPO founded by Susir Kumar, in 2011 for $634 million from private equity firm Blackstone Advisors India.

“The sale of the BPO portfolio has two distinct disposal transactions, with a view to maximising the enterprise valuation. The first transaction is in respect of the majority of Serco’s private sector BPO operations, including the businesses acquired through the acquisition by Serco of Intelenet in 2011 and Infovision in 2008, and selected additional delivery locations in the United Kingdom, Poland and the Middle East,” the group said in its filing with the London Stock Exchange.

The second transaction comprises the sale of the  Financial Conduct Authority (FCA)-regulated business activities of Serco Listening Company Ltd, formerly The Listening Company Ltd, which was acquired by Serco in 2011.

This business principally delivers onshore BPO support services to customers based in the UK.

According to sources, the group will have to raise an additional £500 million to make up for losses of £1.3 billion.

The assets on sale include environment services (revenue of £120 million), leisure business (£25 million) and Great Southern Rail (£58 million).

Source said the BPO business could have a ticket size of $300-500 million.

It has earlier been reported that Susir Kumar is interested in buying the BPO business along with a clutch of private equity players.