The world’s largest buyout fund, Blackstone-controlled Intelenet, has joined the race to acquire majority stake in Firstsource Solutions.
“Intelenet is evaluating the proposal to acquire stakes owned by ICICI Bank, Aranda Investments and Metavante,” two investment bankers with direct knowledge of the deal said. “The buyout is valued at Rs 1,800-2,000 crore,” one of the merchant bankers said. Other contenders for the stake include Genpact and WNS.
Spokespersons of both Blackstone and Firstsource did not wish to comment.
ICICI Bank is planning to dilute its holdings in technology verticals, including Firstsource and 3i Infotech, said another banker. “ICICI Bank is in the process of diluting these holdings. Its stake in Firstsource has been put on block as part of its overall strategy, said a banker. When contacted, the ICICI Bank spokesperson refused comment on the issue.
ICICI group holds 29.7 per cent in Firstsource. The company in its earlier promoted by ICICI as ICICI Onesource, before the name was changed. Aranda Investments, a Mauritius-based arm of Temasek Holdings owns 21.5 per cent, and Metavante Investments holds 20 per cent. However, the promoters have not yet set a deadline for the confirmation bids.
According to sources, Firstsource was a target for BPO players planning to spread their wings in the domestic market.
“The acquisition, when it materialises, will provide Intelenet a strong foothold in the insurance and healthcare verticals. Intelenet is strong in other banking and financial services domain, but insurance space is missing from their portfolio,” said an industry analyst. Firstsource employs 18,500 people globally. Last year, Blackstone bought Intelenet for $200 million.
“With meltdown in equity markets and economic slowdown, the valuations of IT and BPO firms have come down. This makes good performing Indian BPO firms the best acquisition targets,” said an analyst working with Mumbai-based brokerage firm Edelweiss Securities. Firstsource shares closed at Rs 44.30 down 4.22 per cent after touching an intraday high of Rs 50.80 from the previous closing of Rs 46.25.