Essar arm buys US co for $250 mn | india | Hindustan Times
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Essar arm buys US co for $250 mn

india Updated: Aug 05, 2008 00:19 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Essar Group’s business process outsourcing (BPO) arm, Aegis, has acquired PeopleSupport, a US-based BPO firm specialising in travel and transport support and banking and financial services. The deal, worth $250 million (Rs 1,061 crore) would bring in PeopleSupport’s Philippines and Costa Rica-based centres and Spanish-language capabilities to Aegis’ BPO arm, besides access to 15 major US-based clients.

“Travel, transport and banking are evergreen areas for the BPO business, and with Philippines and its proximity to US culture and language, this buy would give us important leverage in the North American market,” said Aparup Sengupta, global CEO and managing director of Aegis BPO.

Post-acquisition, US clients will contribute 58 per cent of Aegis’ revenues compared to 60 per cent from India in terms of client share, before the acquisition. US revenue is expected to grow by 150 per cent over the next year for the combined entity.

Earlier, 67 per cent of Aegis’ revenue was from India in terms of country share. After the acquisition however, India would contribute 40 per cent, while Philippines and US will bring in 33 and 25 per cent, respectively.

The purchase would bring in $160 million (Rs 679 crore) in cash currently on the books of PeopleSupport, which is listed on the Nasdaq, to Aegis.

PeopleSupport will add close to 8,500 people to Aegis’ 20,000 employees at present, and will add $147 million in revenue for Aegis. This could push revenue close to $500 million by March 2010, Sengupta said.

“Entry-level salaries in Philippines are very similar to that of India, and the shared services model will help us reign in costs,” he said. Aegis hopes to use its centralised or shared services structure to bring the high costs of the Philippines centres down to manageable levels, he added.

Aegis BPO will pay PeopleSupport stockholders $12.25 per share in cash through Essar Services (Mauritius), which represents a premium of approximately 29 per cent over PeopleSupport’s closing share price on August 1, 2008, the last trading day prior to Monday’s announcement, and a premium of approximately 42 per cent over the weighted average trading price of the company’s shares during the previous 30 trading days.

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