Genpact, the country's largest BPO firm, today announced that it has signed a definitive agreement to acquire Headstrong Corporation, a global provider of consulting and IT services, for cash consideration of $550 million (around Rs 2,475 crore).
Genpact expects the transaction to be accretive to earnings per share on a GAAP basis in 2011. The transaction is being funded by a combination of existing cash and acquisition financing, and is expected to close by May 31, 2011, subject to customary regulatory and other conditions.
"Headstrong is a complementary high-growth business, built by talented leaders, that is an excellent fit strategically, financially, operationally and culturally. With this acquisition, we are gaining critical domain and technology expertise in the complex, but highly attractive, capital markets industry vertical. This expertise – combined with our capabilities in business process management (BPM) and Smart Decision Services that encompass analytics and reengineering – will create a uniquely powerful value proposition for clients," said Pramod Bhasin, president and CEO of Genpact.
Headstrong generated revenues of about $217 million in 2010 and Genpact expects Headstrong's long-term growth rate to be in excess of 20% a year.
Headstrong is a leading player in several segments of the capital markets industry vertical, such as asset management, derivatives, wealth management, prime brokerage, reference data, compliance and mortgages. Headstrong counts nine of the world's top-10 investment banks and three of the top-5 asset managers as clients. The company also has an emerging practice in healthcare administration. Headstrong has approximately 3,700 employees in seven countries and generates a significant amount of revenue from employees who are onsite with clients in the United States, the United Kingdom and Japan.
"This transaction is the next stage of our evolution and it immediately positions Headstrong to emerge as the global leader in domain-led services to the capital markets," said Sandeep Sahai, CEO of Headstrong.
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Genpact's Chief Operating Officer Tiger Tyagarajan said: "We are combining forces for our clients who seek a nimble provider with global scale, specialist knowledge and end-to-end solutions, such as through Smart Enterprise Processes. By enhancing our domain expertise, we can more broadly deliver our end-to-end solutions to clients in specific industry verticals. The acquisition of Headstrong will also help us expand operations in the US and shift our centre of gravity to be even closer to our clients."
Citigroup Global Markets Inc and UBS Securities LLC acted as the financial advisors to Genpact in this transaction and Cravath, Swaine & Moore LLP acted as outside legal counsel. Morgan Stanley acted as exclusive financial advisor to Headstrong in this transaction and Kirkland & Ellis LLP acted as its legal counsel.