Tech Mahindra buys Hutchison Global Services for $87.1 mn
Tech Mahindra buys Hutchison Global Services for $87.1 mn
Mumbai: Tech Mahindra Ltd has acquired Hong Kong-based Hutchison Whampoa Ltd’s call centre and back office business in India for $87.1 million (around 479 crore) in an all-cash transaction.
Hutchison Global Services Pvt. Ltd provides services to customers in the UK, Ireland and Australia and employs more than 11,500 people in India, Tech Mahindra said in a statement. As part of the transaction, clients of Hutchison Global Services have committed to procure services worth $845 million over a five-year period, said a Tech Mahindra official.
“This acquisition is in line with our growth plans and is a logical next step in extending our relationship with Hutchison. There will be considerable enhancement in customer acquisition,” said Vineet Nayyar, executive vice-chairman of Tech Mahindra, adding that Tech Mahindra is open to making more investments in Hutchison Global.
Capital for the acquisition was raised through internal accruals and borrowings, said the company official cited above.
According to the official, Hutchison Global’s annual revenue is more than $160 million. “Its profitability is comparable to what we do at our BPO business in Tech Mahindra,” said Sonjoy Anand, chief financial officer of Tech Mahindra, without disclosing further details.
Tech Mahindra plans to absorb all employees of the acquired company.
Both Nayyar and Anand declined to give details on tax liabilities associated with the deal. Kotak Mahindra Capital Co. Ltd acted as the financial adviser for Tech Mahindra, while Hutchison was advised by Goldman Sachs.
Mergers and acquisitions in the business process outsourcing space this year have declined dramatically from last year.
Till September, there have been nine such transactions in the BPO space worth $184.1 million, compared with 19 deals worth $861.7 million in the same period a year ago.
Experts are, however, hopeful that such transactions will pick up later this year. “We will see more such deals as captives make a lot of sense for companies that have a specialized play. All top five companies in India are looking for captives,” said Jatin Bery, executive director of Kotak Mahindra Capital.
According to investment banker Deepak Srinath, there will be an increase in the number of captive centres being sold as these are turning out to be good assets for unlocking value of a business which have mostly been created internally. “At a certain point, the cost of running a captive is only a bit less than outsourcing. These assets, however, have a lot of value for a company that has specialized offerings,” said Srinath, director of Bangalore-based boutique investment bank Viedea Capital Advisors.
On Tuesday, shares of Tech Mahindra advanced 1.28% to end trading at 820.90 on BSE, outpacing the benchmark Sensex’s 0.32% gain.
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Business NewsCompaniesTech Mahindra buys Hutchison Global Services for $87.1 mn
First Published:4 Sep 2012, 11:57 PM IST
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