Teleperformance in talks to buy Aegis

Euronext-listed Teleperformance is in talks to acquire the Mumbai-based Aegis, the business process outsourcing (BPO) services arm of the Essar Group, sources in the know said.

Founded in 1978, the Paris-headquartered Teleperformance reported $3.23 billion in revenues in 2013. The company operates 230 contact centres across 62 countries and employs over 110,000 people.

“Talks are at an initial stage. But this time Aegis’ promoters are looking to sell only the overseas centres and operations of the company. The domestic part of the business will not be sold,” said a source in the know who did not wish to be named. “The valuation of the company depends on the business components they are willing the sell,” said another source requesting anonymity.

ABOUT THE TWO

• Founded in 1978, Paris-based Teleperformance today employs over 110,000 people globally with over 230 contact centres across 62 countries
• The Euronext-listed company reported $3.23 billion in revenues in 2013
• It started India operations in 2001
• The company has presence in three cities, including Gurgaon, Jaipur and Indore, with a headcount of over 4,000
• Aegis, the Essar Group company which provides BPO services to global as well as Indian clients, is believed to have annual revenues of around $800 million
• The company currently has a global headcount of around 55,000 across 55 centres in 13 countries

According to Nasscom listing, Aegis is the fourth largest BPO services firm from India with revenues of $800 million. The revenue has come down from $1 billion because after an inter-company transfer, AGC Networks which used to be a subsidiary of Aegis, is now a subsidiary of Essar Group. According to the company listing with BSE on April 1 this year, Essar Telecom increased its stake in AGC Networks to 75 per cent from the earlier 29.3 per cent.

An Aegis spokesperson said, “As company policy we would not like to comment on market speculation.”

An email sent last week to Mark Pfeiffer, executive vice-president, global management, at Teleperformance who is also responsible for media queries, remained unanswered.

Aegis operates 55 centres across 13 countries, employing around 55,000 employees. According to third-party estimates, the company’s headcount in India is 24000-25000, of which 90 per cent cater to the domestic market. Outside India, the company has a large presence in the Philippines, where it has around 13,000 employees, while in the US its headcount is believed to be 5,000.

According to industry sources, North America accounts for around 40 of Aegis’ revenue, followed by the Asia-Pacific region, including India, Malaysia and Sri Lanka, at around 35-40 per cent. Europe, Middle East and Africa contribute around 15 per cent of revenue and South America 10-12 per cent.

The management of Aegis has stated the company was earlier in talks with private equity and financial investors to offload some stake. Industry sources said the talks failed over valuation, possibly because the company’s profit margin is lower than its peers. News reports said private equity players like Kohlberg Kravis Roberts and Barring were interested in acquiring stakes in the company.

In an earlier interview to Business Standard, Aparup Sengupta, the former chief executive officer of Aegis, had said the Essar Group might exit Aegis over time depending upon the value it gets. "The promoters would look at an initial dilution of minority holding in the range of 15-30 per cent. So when we go for an initial public offering, there will be no shareholder holding more than 50 per cent in the company,” he had said.

The BPO industry is undergoing consolidation. Earlier this year, the Aditya Birla Group sold its Canada-based BPO arm, Aditya Birla Minacs, to a group of strategic financial investors for Rs 1,500-1,600 crore.