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Spanco in talks with PE investors; ramps up ops

Spanco in talks with PE investors; ramps up ops
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First Published: Tue, Jun 21 2011. 11 21 AM IST
Updated: Tue, Jun 21 2011. 11 21 AM IST
Mumbai: Telecom and IT services firm Spanco Ltd is in talks to bring in private equity investment in its BPO business and expects to close a deal in the next six months, an official told Reuters late on Monday.
This investment will be a part of the Rs 500 crore influx of funds approved by the company’s board in March.
“We will bring in a private equity investor and give an exit through an initial public offering in three years,” Kaustubh Dhavse, vice president, strategy, said.
Last month, the company brought on board Bessemer Venture Partners Trust, Mauritius, to pump in Rs 80 crore in its power distribution business.
“At an opportune time, in the next six to eight months, we will also bring in equity at the parent level,” Dhavse said. “We are waiting for markets to stabilize.”
Spanco, which focuses on outsourcing services in emerging markets, expects revenue from its BPO business to double in FY12 from Rs 210 crore last fiscal, Dhavse said, adding the company plans to expand in Africa and India.
Last month, the chief executive at Spanco BPO services had told Reuters his company sees Africa as a solid opportunity and expects a turnover of about $100 million purely from the BPO business from Africa by 2013.
In India, after opening centres at Mohali, Coimbatore and Dehradun last year, Spanco expects to open a 250-seater centre in Nagpur.
“It is under discussion and will come up this fiscal. The minimum capacity will be 250, scalable to 1,000,” Dhavse said.
Govt contracts boosts growth
Spanco’s technology infrastructure business has also been growing rapidly, especially due to the phenomenal increase in the number of government contracts.
Spanco, which caters to clients from verticals such as e-governance, defence, power, transport and telecom, expects revenue from its technology infrastructure business to jump 20% in FY12 from Rs 1,478 crore last fiscal.
The firm has a total order book of Rs 3,3o0 crore to be executed over the next 18 months. This backlog includes orders for its technology infrastructure, BPO and the newly-added power distribution franchise businesses.
Last month, Spanco took over the assets of the Nagpur circle of Maharashtra State Electricity Distribution Co Ltd as a designated distribution franchise.
Although the firm faced a few hiccups during the first month as it took over a system where the maintenance was poor and technology threadbare, Spanco has its eyes set on more such contracts, Dhavse said, calling power distribution franchises a “dynamic” and “cash rich” business.
Spanco expects to add three or four new distribution franchises in the next 16 to 18 months and increase revenue from the business to Rs 2,500 billion rupees by FY14 from the projected Rs 540-600 in FY12, he said.
The company has bid for tenders in three more areas of Maharashtra and will soon focus on Madhya Pradesh, where tenders are opening up, he added.
“Maharashtra and Madhya Pradesh, we are definitely looking at, but there are a few other states also, where we have our eye.”
To keep up with the growth, Spanco expects to add more than 3,000 employees, mostly in the BPO business, to its headcount of 1,400 this fiscal, he added.
Shares of the Mumbai-based firm, which were down as much as 5.2% in early trade, pared some of the losses to trade down 1.5% at Rs 129.90 in a firm Mumbai market.
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First Published: Tue, Jun 21 2011. 11 21 AM IST