Integreon eyes larger deals post Actis stake; scouts for buys

Integreon, the Knowledge Process Outsourcing (KPO) and legal process outsourcing (LPO) company, says it is getting access to larger deals after private equity firm Actis acquired a 30 per cent stake in it earlier this year.

“Having Actis on the board has given us access to larger deal sizes. It is much easier now to access them. Besides, having a PE with you automatically puts an end to questions on financial credibility,” explains Lokendra Tomar, COO, Asia Pacific, of Integreon.

He adds that for this year, the company would achieve a revenue run rate of 50 per cent over last year and touch revenue of over $120 million by the fourth quarter of 2010. The revenue for 2009 was $89 million (Rs 400 crore).

PE player Actis, an emerging markets specialist, invested $50 million (Rs 230 crore) to acquire a 30 per cent stake in Integreon earlier this year. Integreon has 2,000 employees worldwide, of which close to 1,200 are in India.

With a cash position of $25 million (around Rs 110 crore), the company is also scouting for acquisitions. “We are currently in talks with two potential targets but will not be able to say if we can sign anything. We would be interested in captives as well, which are into similar work. Besides, like last year, we expanded into geographies like China and South Africa and we do have plans to expand into Eastern Europe and Latin America,” says Tomar.

The company had recently acquired Grail Research, a captive of US-based Monitor Group, a global advisory firm. This is the sixth acquisition for Integreon since 2001. It also signed a five-year contract with the Monitor Group.

Another trend, according to Tomar, is that an increasing number of companies are looking for third-party expertise for research and legal work. Companies in the US and Europe have annual marketing budgets of $100 million; they also spend around $150 million each as legal fees. “We want to get a larger pie of these spends. Earlier, we would get deals on a project basis of $1 million but now we want to change this to a retainer model that will give the firm revenue of $7-8 million annually,” says Tomar.

Integreon is also one of the few third party KPO firms that had entered into partnerships with law firms for litigation and research work. Last year, though the industry saw hardly any deal flow, Integreon successfully signed on three law firms. “Last year, we signed two major deals. We are seeing a similar interest in the UK markets as well. We are in discussion with two to three firms and are hopeful to sign up at least two,” says Tomar.