HDFC buys TCS stake in Intelenet for Rs 161 cr

The Housing Development Finance Corporation Ltd (HDFC), which is buying Tata Consultancy Services' (TCS) 50 per cent stake in Intelenet Global Services for Rs 161 crore, may sell the entire TCS stake to a private equity investor in a month.

HDFC chairman Deepak Parekh said: "This is not our core business and we will not keep 100 per cent stake with us. We are talking to a few private equity firms besides some global outfits. There are a few options."

Parekh refused to say whether HDFC will sell off the 50 per cent stake or less, but hinted that there could be more than one foreign partner. The deal will be worked out over the next one month or so and till such time, for all practical purposes, HDFC will be warehousing the TCS stake in Intelenet Global Services.

With HDFC buying out the TCS stake at Rs 161 crore, Intelenet Global Services valuation works out to Rs 322 crore. Following the exit of TCS, the company will hold roadshows for its customers in US assuring them that the quality of service will remain the same. "We have started ramping up operations. The number of employees jumped from 3,000 to 4,000 in the first quarter of this fiscal year," Parekh said.

TCS has reached an agreement to fully transfer its ownership in Intelenet to HDFC. Following which, the business process outsourcing firm would be a 100 per cent subsidiary of HDFC.

TCS and HDFC stated that with continued growth in Intelenet's business, it became necessary to consolidate its ownership. It was mutually decided that the ownership would be transferred entirely to HDFC. TCS had earlier wanted to buy out HDFC's holding.

TCS and HDFC set up Intelenet in equal partnership in June 2000. Over the last four years it has become a leading BPO, having created a world-class entity with a staff strength of over 4,200 employees. It has six delivery centres with two facilities in Mumbai, Chennai, the US, Canada and the UK.

During fiscal 2004, Intelenet's revenues touched Rs 117 crore with the operating profit at Rs 26.60 crore.

Its bottomline stood at Rs 10.8 crore, as it caters to 18 reputed companies across UK and the US, which have outsourced voice, back office and accounting processes.

With customer management and back office processing being an integral part of HDFC's core competencies, the housing finance major is keen to leverage this in creating Intelenet as a leading BPO player in India.

..Will unload pie to investors

• Deepak Parekh, HDFC chairman, says the home finance firm will offload TCS pie to investors.
• TCS' exit follows its plan to concentrate on its core business as it goes for an initial offering.
• Intelenet was set up in June 2000 with TCS and HDFC as equal partners.
• With Rs 117 crore in revenues during the fiscal 2003-04, the BPO has 4,200 on payrolls.