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October 29, 2012
Transaction Analysis
RPG Group to Buy Stake in Firstsource Solutions Ltd.  

Financial Overview:
  • Transaction Value: $65 million
  • Transaction Structure: Cash

 martinwolf Analysis:

  • RPG Group, an Indian industrial conglomerate, is acquiring a minority stake in Firstsource Solutions Ltd. (BSE:532809), a global BPO provider, through its subsidiary CESC Ltd. (BSE:500084).
  • The transaction was consisted of a combination of stake purchases from existing investors and of new equity.
  •  CESC Ltd. component company Spen Liq Pvt. Ltd. will acquire a 49.5% stake in the BPO firm for a total of 3.5 billion rupees (approximately $65 million). Firstsource logo
  • This has also triggered an open offer from CESC to acquire another 26% stake in Firstsource, making CESC Ltd. a majority shareholder.
  • RPG Group has the means to continue growing in scale.
  • Firstsource was established in 2001 by martinwolf strategic partner ICICI Bank under the name ICICI InfoTech Upstream Ltd.
  • The deal continues the consolidation trend within Indian IT services being dominated by large players (such as Tech Mahindra's previous acquisition of Hutchinson Global).
  • Over the past few years, Indian BPO service providers have been restructuring their approach in order to deliver services across the entire value chain within particular verticals.
  • RPG is positioning for an increase in Indian IT BPO exports, which are expected to grow 11-14% according to a NASSCOM strategic review.
  • Indian IT BPO service providers are seeking large enterprise clientele in both U.S. and Europe and are therefore placing an increased focus cross-border partnerships and M&A. This transaction represents the opportunity to gain large accounts in both U.S. and the U.K.
  • With India poised for growth and 75% of total IT services revenue in India coming from the 4 verticals (government, manufacturing, telecom and BFSI), this acquisition positions RPG to capture growth in India.
  • In both short and long term, impending healthcare reforms in the US are expected to give BPOs like Firstsource a boost as they have expertise in healthcare.
  • We believe BPO business promises high growth in coming years, but companies who will choose aggressive inorganic routes will be the winners.
  • Based on our intelligence, we expect an increasing number of cross-border deals in the non-voice BPO sector originating from Indian buyers. 

Source: CapitalIQ

 

martinwolf was not the adviser in this transaction.

 

To learn more about martinwolf contact Matthew Putzulu at mputzulu@martinwolf.com.  

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With offices in San Francisco and Bangalore, India, martinwolf is a leading middle market M&A Advisory focused on companies with services-based business models. Since 1997, our team has completed more than 115 transactions in six countries. We are a five-year member of the Merrill Lynch PS Referral Network, and were selected as ICICI Bank's (India's leading private bank) exclusive strategic partner for acquiring U.S. IT companies. martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.

   

June 15, 2012

glendonTodd Capital LLC announced that it acquired Aztec Systems, a leading provider of enterprise technology solutions to hundreds of U.S. middle-market companies. Aztec was represented by martinwolf in this transaction. Aztec, a member of Microsoft's Presidents Club, was recently ranked 27th in revenue on Bob Scott's 2012 Top 100 VARS list and serves more than 700 middle-market clients. Terms of the transaction were not disclosed. Please click here to view the announcement.

 

December 1, 2011

Softchoice Corporation (TSX: SO) announced it has it has fulfilled its regulatory requirements under the Competition Act and has now completed the acquisition of substantially all of the assets of UNIS LUMIN, one of Canada's most highly regarded Cisco networking and managed services companies. Softchoice was represented by martinwolf. The acquisition strengthens Softchoice's professional services capabilities while providing the technology foundation to support the Company's future cloud offerings.

Please click here to view the announcement.   

 

September 30, 2011

SPS, a leading Unified Communications Provider, announced that Court Square Partners has made an investment in the company. martinwolf advised SPS in this transaction. SPS is a premier unified communication services integrator, ranked 131 on the 2011 VAR 500 list with 2010 sales of $143 million. Court Square is a $4B+ New York-based PE Group, with more than 150 lifetime investments. Please click here to view the announcement. 

 

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