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Jun 01, 2011, 10.25 AM IST
Britain's Serco is to buy Indian outsourcing company Intelenet for up to 385 million pounds (USD 634 million) as part of a drive into higher-growth overseas markets. Sushir Kumar, CEO, Intelenet speaks about the deal.
In an interview with CNBC-TV18ís Kritika Saxena, Sushir Kumar, CEO, Intelenet says, the transaction is being done at a total of upto 385 million pound sterling, which includes about 50 million sterling on account of earn outs.
He further says, the definitive agreements have been signed today. ďIt will take about four-six weeks for us to get regulatory approvals before which we can get to close. And on closing we will have the current board of directors stepping out and a new set of board getting formed,Ē he adds.
He also says, the company will grow at a faster pace post deal closure.
Also read: UK's Serco to buy Intelenet for $634 m
Here is a transcript of the exclusive interview with Sushir Kumar on CNBC-TV18. Also watch the accompanying video.
Q: There are three large investors, Barclays, Blackstone and HDFC that will be exiting. Blackstone holds round 66%. Can you give us an idea about what is the premium that these individual investors will be getting? 385 million pounds is the figure, what is the demarcation for the investors? Could you give us a broad purview?
A: The transaction is being done at a total of upto 385 million pound sterling, which includes about 50 million sterling on account of earn outs. We all know that 66% of the company is held by Blackstone, 12.75% of the company is held by Barclays, 4.5% is held by HDFC and the balance 16% is held by the management team, a large group of people within the company. So, I think everybody is given proportionately. Itís not that one shareholder is given more and the other shareholder is given less. Itís all proportionately given to all the shareholders.
Q: As a part of this deal, there will be an exit from all the board representatives from Blackstone, HDFC and Barclays. Will there be a board reshuffle now? Can you give us details on by when will the board reorganisation be complete, by when will Blackstone, Barclays, HDFC representatives exit the board?
A: As of today morning, the definitive agreements have been signed. It will take about four-six weeks for us to get regulatory approvals before which we can get to close. And on closing we will have the current board of directors stepping out and a new set of board getting formed.
The relationship with Blackstone and Barclays will continue going forward. They will continue to be our clients. They have been a great supporter of the company as investors. Blackstone as you know in the last three years have added about six clients in their portfolio companies. Barclays has been a client for us for a long time and they continue to grow as a client of ours. Even HDFC is a client of ours. So, the relationship will continue with them as our clients, but obviously there is going to be a board change.
Q: Is there some kind of a definitive agreement wherein there is an assurance that the clients from these three investors will remain put in the company?
A: There is no kind of commitment in that sense. If you see Blackstone, the Blackstone fund is invested, but the companies who are our clients are basically the Blackstone portfolio companies. So, I think in terms of the clients, the relationship will continue as long as we are able to provide value to them. Similar with Barclays, it is very clearly as long as you are delivering service they are going to continue as your client, but there is no commitment as a part of this deal to continue as clients.
Q: Also now of course you have said earlier that you will be merging or rather combining Serco BPO along with Intelenet, which basically means that the combined entity will be a 100% owned subsidiary of Serco global division. Can you give us details on how the merger would work?
A: Serco is USD 4.3 billion sterling listed company in the London Stock Exchange. Serco made an investment about two years back in a company called InfoVision, which is now called Serco BPO. So, Serco BPO is roughly about 8,000 people, which is completely focused on the domestic India market. Intelenet has about 32,000 people and works both in international market and the domestic market.
For Intelenet, about 75% of its revenues come from international business and 25% of its revenue come from domestic business. Intelenetís domestic business is the largest supplier of services in the domestic market. So, combining Serco BPO with the Intelenetís domestic business, the Intelenet domestic business by far would be the largest supplier of services within India. This combined entity will become the BPO division of Serco. So, Serco is basically involved in providing frontline services. I think the whole vision is to be a company which can give complete end-to-end service, right from consulting to front line services to middle and back office and technology, altogether.
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