Serco has signed an agreement to acquire Intelenet, a leading provider of business process outsourcing (BPO) services to the private sector around the world and in the domestic Indian market, for up to £385m.
From operations in 34 global delivery centres across seven countries, Intelenet provides a broad range of middle and back office services and has a strong customer base of international organisations, predominantly across the financial services, travel, healthcare and telecom sectors.
This acquisition is in line with Serco’s strategy which is focused on driving organic growth, supplemented by strategic acquisitions of skills and capabilities to enter new markets and sectors. The acquisition will provide access to attractive markets. The international and domestic Indian BPO markets are large, forecast to grow around 15% per annum in the medium term, and have margins reflective of high value services. It will broaden customer and geographic reach. It will also add to scale and depth of capabilities.
The total acquisition cost of up to £385m includes contingent payments of up to £50m, and will be fully funded from Serco’s debt facilities. Expectations are for Intelenet to continue achieving organic annual revenue growth of 10% to 15% and to maintain its Adjusted operating profit margin, before net cost synergies, at around 12%
The acquisition is expected to be accretive to earnings in the first full year with returns meeting Serco’s cost of capital in the third full year of ownership. The acquisition is subject to regulatory approval, which is expected in the coming months.
"The acquisition of Intelenet supports our ambitions as a leading global service company. The international BPO market is growing quickly as companies seek out new ways to improve their service and reduce costs. Intelenet's high value capabilities and customer base, together with its economies of scale, means we can access new markets and strengthen our existing propositions. I am particularly delighted that the Intelenet management team will join us to continue driving the business forward. Their passion for their customers and people, and their philosophy of service excellence, means they will be a great asset to Serco," said Chris Hyman, Chief Executive, Serco.
"We are excited to become part of the Serco family which is strategically aligned to our business. Becoming part of Serco will propel us to our next phase of growth, by helping us to address a wider market and to provide more end-to-end solutions. My management team and employees keenly look forward to working with our new global colleagues. We are grateful for Blackstone, Barclays and HDFC for their tremendous support of the company and we are pleased to be continuing the strong relationship with them as our clients," said Susir Kumar, Chief Executive of Intelenet Global Services.
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Updated Date: Feb 02, 2017 23:06:27 IST