PE firm Blackstone may buy BPO firm Intelenet

Intelenet, a third-party BPO and ranked among the top 15 in India is up for sale and Blackstone is learnt to be in race to acquire equal stakes held by HDFC and Barclays Bank for a deal size expected between Rs.960-Rs.1000 crores.

Intelenet offers call centre services, back office operations and e-mail management, along with financial accounting and technical helpdesk services. It was formed initially as a JV between TCS and HDFC. In 2004, TCS sold its stake to HDFC for Rs.161 crores. Later, HDFC sold 50% stake to Barclays for Rs.164crores.

BPO is the fastest growing sector in India and recorded exports of $8.3billion in FY07. Sensing the growth potential, all top IT firms have their own BPO operations. Infosys Technologies recently bought out Citigroup’s stake in its BPO subsidiary and renamed it Infosys BPO.

Intelenet’s revenues are around Rs.380 crore and an operating profit of around Rs.55 crore while its listed domestic BPO Sparsh (Intelenet holds a 51% sake acquired from Spanco Telesystems) has Rs.87.44 crore revenues and net profit of Rs.87.3 lakh, Last year Japanese systems integrator Fujitsu Consulting was also interested in acquiring a stake in Intelenet.

Valuations of Indian BPO firms are among the highest and Intelenet’s valuation may prove a benchmark for expected BPO deals in India. Citigroup Global Services (formerly e-Serve International) is expected to sell its stake to private equity players like Genpact did, and then take third-party business from banking and financial institutions.

With the attrition rate reaching high levels and costs of operations increasing, the BPO may see further consolidation in coming days.