A billion-dollar deal seals Blackstone buyout of visa outsourcing firm VFS

Company founded in India in 2001; now among its top 3 markets

Blackstone has acquired VFS Global, the world’s largest visa processing service provider, from Swedish private equity (PE) firm EQT Infrastructure in a $1.1-billion deal, pinning hopes on global travel rebound.

Blackstone will hold a 75 per cent stake in the company; the balance will be held by EQT and Kuoni and Hugentobler Foundation.

Founded in Mumbai in 2001, VFS serves over 60 governments through 3,500 visa applications in over 140 countries. In 2020, it posted a revenue of $739 million, with a compound annual growth rate of 14 per cent.

India is among the top three markets for VFS. In 2019, it processed over 6 million visa applications from 51 centres in the country. The company’s global support office is also based in Mumbai. The company is headed by Chief Executive Officer (CEO) Zubin Karkaria.

Lionel Assant and Amit Dixit, Europe and Asia heads of Blackstone PE, said, "VFS spearheaded the visa outsourcing business. It is today a global market leader, playing a crucial role in enabling access to travel for millions around the world in an efficient and secure manner. VFS’ local market expertise, unmatched global footprint, and technology leadership makes the company a reliable partner to client governments across the world."

VFS was conceptualised by Karkaria, then chief operating officer of Kuoni India in 2001, to address the pain points of Indian globetrotters (Kuoni sold the business to EQT in 2016). Back then, visa applicants had to stand in long queues outside Consulates while visa officers pored over applications. VFS made the job easier for Consulates since they had to only decide on granting or rejecting a visa, while VFS would handle the collection and scrutiny of documents. The first pilot project was with the US Consulate in Mumbai, followed by Pune and Ahmedabad.

Soon more contracts followed. By 2005, Kuoni India was processing visas for 11 countries in India, including the UK, Canada, and Australia. Karkaria also became the CEO of the Indian business that year. The company’s global foray began in 2007, when the UK governmentoutsourced visa processing in 33 countries.

“Zubin’s success is in conceptualising, executing, and nurturing the business. He understands the travel and visa segment really well,” said a former colleague.

While today VFS is a market leader, with over 50-per cent market share in the visa processing segment, the business idea was initially met with scepticism.

“My colleagues thought the Americans would never agree to such an idea,” said Karkaria in a media interview in 2015. Theirs was the toughest visa regime, with more processes and documentation than any other country, he added.

“VFS' core business operations are process-driven. The company has been successful in replicating them around the world,” said a former colleague.

Visa processing is a niche business, driven by trust and relationship with governments. Contracts are awarded by governments at local and global levels and those require the company to maintain high standards of service delivery, while adhering to the data protection laws. “VFS' strength has really been its operations team,” he added.