Bain Capital to acquire 30% stake in Genpact
- Transaction Value: $1 billion
- Implied Enterprise Value: $3.24 billion
- EV/Revenue: 1.7x
- EV/EBITDA: 10.5x
- Bain Capital, LLC on August 1 announced that it had entered into an agreement to acquire a 30.49% stake in Genpact Ltd. (NYSE:G) from General Atlantic LLC and Oak Hill Capital Partners.
- This deal provides General Atlantic and Oak Hill with a good opportunity to cash in on their gains over the approximately eight years that they have held a part of the company - they originally purchased 60% from GE, its former parent company, for $500 million in 2004.
- Bain has been acquisitive in Asia recently, having announced a deal to buy a 50% stake in a Japanese shopping channel for $1.3 billion last month.
- The growth of Genpact over the past eight years is exemplified by the two different implied enterprise values- $833 million for the 2004 transaction and $3.24 billion in today's transaction.
- The timing of this transaction is beneficial to all parties-Genpact is coming off Wednesday's announcement of a strong second quarter, with profits rising to $61.1 million over one year ago.
- Genpact gains the resources of Bain Capital, and with them should be able to continue its significant growth.
- The deal, and the path that Genpact took before ending up at this point, illustrates the changing nature of the global economy.
- Originally, Genpact was created as GE Capital International Services, the outsourcing arm of GE (still one of Genpact's largest sources of revenue)
- Genpact has historically been the king of BPO in India, and has recently looked to expand its specialty into higher value it services with the acquisition of Headstrong, an American consulting and IT services company as demand for BPO firms has declined among many strategic investors.
- With Indian firms increasingly look to move beyond outsourcing, as margins are eroding rapidly without any promise for returning, we are seeing the effects of an increasingly interlinked global economy, where assets may be in in one country but customers can be found across the globe.
- Large private equity firms are capable of creating value, as their funds enable them to quickly consolidate companies in an economy where scale matters.
Please click here to read the press release.
martinwolf was not the adviser in this transaction.
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