Aegis puts on hold India listing; plans to buy 3 firms instead

Aegis Limited, the business process outsourcing (BPO) arm of the Essar Group, has put on hold its plans to list on the Indian bourses. Instead, the company is planning to acquire at least three companies — two overseas and one in India.

Aegis had plans to raise around Rs 700 crore and was to file for a draft red herring prospectus (DRHP) in April.

“The initial public offering (IPO) has been deferred as the company has identified three targets for acquisition. There are two large acquisitions overseas and a third, smaller one, in India,” said a banker involved in the process.
 

RECENT ACQUISITIONS
Ismart Timex	Undisclosed sum	2009
CCN Group	$50 million	2009
PeopleSupport	$250 million	2008
AOL Call Centre (India)	Undisclosed sum	2008
Teletech Services	$13 million	2007
Global Vantedge	Rs 100 crore	2007

“Aegis is always looking at a range of different funding options but has not yet made any specific decision with regards to its future financing,” a company spokesperson said. When asked to specifically comment on the acquisitions, the spokesperson added: “Aegis continuously scouts for acquisition opportunities across geographies. However, we cannot comment on specifics like geography, timeline, or target company details.”

Aegis, with close to 39,000 employees, has a presence in over 10 countries across the world. The $600-million (around Rs 2,700 crore) firm provides voice and non-voice BPO services in verticals like BFSI (banking, financial services & insurance), healthcare and telecommunications.

Bankers and market experts are of the opinion that putting the IPO on hold makes sense for the company. “This makes sense as the company’s revenues will go up, which in turn would impact its valuations and multiples. It can always use the IPO proceeds to repay the debt,” said a banker on condition of anonymity.

Experts also opine that if the company acquires any firm during the time the DRHP is filed, then it will have to review the original document again, which is a cumbersome process.

“The company was raising these funds primarily for its acquisition strategy and expansion. The promoters were looking at minimum dilution of equity. They are looking at minimum possible equity dilution, this will be in the range of 12-13 per cent,” said a source familiar with the development.

Inorganic growth option is not new to the company. Aegis has acquired about 13 firms in the past three to four  years. The company has said in the past that its target is to make four acquisitions in a year. Aegis had last acquired 80 per cent stake in Ismart Timex, a leading BPO firm from Sri Lanka, for an undisclosed amount.