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India’s largest business process outsourcing firm Genpact is drawing up plans to leverage the entry of private equity investor Bain Capital Partner in the company.
Mohit Thukral, senior vice-president, Genpact told Business Standard that as the transaction closes, which might happen by October the company will put together a team that will talk to Bain investee companies.
Last month, Bain Capital, which was co-funded by US Republican Presidential candidate Mitt Romney, had announced it would acquire a 30 per cent stake in Genpact, as two other private equity players General Atlantic and Oak Hill Partners made part exit, for $1 billion (Rs 5,500 crore now).
As part of the transaction, Bain Capital has agreed not to sell any Genpact shares for two-and-a-half years, subject to limited exceptions, and has agreed to a customary standstill.
“Bain’s entry into the company brings tremendous opportunity. They have invested in several companies across the globe, which can be potential customers for us. We are thinking how we can go and sell to their portfolio firms,” added Thukral.
The other aspect where the company might look at leveraging Bain’s expertise is its inorganic strategy. “We have stated earlier that we will make three-to-four small tuck-in acquisitions every year. This year, we have so far done three and might close one more,” Thukral added.
I think Bain coming on board and also the fact that they will hold their investment for some time will mean they can channalise our thinking and help us in our acquisition strategy,” Thukral added.
Genpact, which reported revenues at $467.6 million for the quarter ended June 30, expects 15-17.5 per cent growth in 2012. While the company would see majority of this growth from the organic route, around two per cent will be contributed by the inorganic route, Thukral said
Meanwhile, the Federal Trade Commission of the US cleared Bain’s investment in Genpact. According to the FTC website, two of Bain funds, Bain Capital Partners Asia II LP and Bain Capital Partners X LP, received approval for investment in the Indian company.
According to the software industry lobby, National Association of Software and Services Companies (Nasscom), the Indian BPO industry has grown at a compounded annual growth rate of 17 per cent from 2005-06 to 2011-12. In 2011-12, Nasscom expects the industry to have grown over 12 per cent.
Talking specifically on the BPO sector (Information technology services contribute over 24 per cent to its revenue), Thukral said that though deals were happening the macro-environment demanded a cautious outlook.
“We are partnering with clients onshore, which means transformation work. We also see demand for offshore, which helps them drive efficiency, but they are also looking at segment which will drive top line like use of analytics, etc.,” he added.
For the quarter ended June 31, Genpact added 35 new client relationships across all major industry groups, up from 26 in the second quarter of 2011.
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