EXL to acquire Outsource Partners for $91 mn

ExlService Holdings, a business process outsourcing company, today acquired finance and accounting (F&A) outsourcing service provider Outsource Partners International for $91 million.

After the acquisition, EXL expects revenues between $347 million and $355 million, representing year-over-year growth of 37.3 per cent to 40.5 per cent. The transaction is expected to close by June 1.

This acquisition is likely to help EXL establish itself as a leading third-party service provider in the global F&A outsourcing market.

The move is the latest in the BPO space after the acquisition of Headstrong by Genpact. It indicates that pure-play back office service providers are seeking to bolster their scale and service the portfolio through acquisitions.

EXL will utilise existing cash and working capital to fund the transaction.

“The acquisition furthers EXL’s strategic objective of leveraging technology and proprietary intellectual property in our solution offerings,” said Rohit Kapoor, President and CEO of EXL.

”We will also firmly establish our onshore outsourcing presence in the US, while enhancing our European and Asian delivery footprint.”

OPI has 3,700 professionals globally and 80 clients. EXL has 13,000 employees across countries. Clarence Schmitz, CEO of OPI, and Kishore Mirchandani, President, will join the management team of EXL after the close of the transaction.

“This transaction enables the logical next step in OPI’s growth, transformation and outsourcing capabilities. The combined company will have the ability to meet an even broader range of client requirements and to accelerate our investments in proprietary F&A platforms and solutions,” said Clarence Schmitz, Chairman and CEO of OPI.

OPI’s clients will benefit from the addition of EXL’s transformational skill sets, a broader geographic delivery footprint and its strong balance sheet,” said Schmitz.

The acquisition of OPI is attractive both strategically and financially. We expect the transaction to be accretive to adjusted EPS in 2011.

“We are pleased to increase our calendar year 2011 guidance based on the strong performance during the first quarter and momentum in EXL’s business, as well as to include the acquisition of OPI,” said Vishal Chhibbar, CFO of EXL.

EXL itself had been recently touted as an acquisition candidate. OPI had revenues of $76 million as of December 31, 2010, and achieved revenue growth in excess of 15 per cent.

For the first quarter ended March 31, 2011, EXL had reported 33 per cent growth in its net revenue at $72.9 million, compared to $54.5 million in the same quarter last year. Net income for the quarter ended March 31 was $8.4 million compared to $5.6 million for the quarter ended March 31, 2010.