Oak Hill may merge Genpact, Vertex Data

Oak Hill Capital Partners, a US-based private equity firm, is understood to be working towards merging its two BPO portfolio companies, Genpact and Vertex Data Systems.

Sources close to the development said the merged entity would raise an initial public offering (IPO) that may be listed on a foreign or domestic bourse, in a landmark issue in the BPO space.

When contacted, Oak Hill said, "We do not comment on market rumours." Responding to a query from Business Standard, General Atlantic LLC, which teamed up with Oak Hill to jointly acquire a 60 per cent stake in Genpact, said it did not comment on "any speculation or rumours" regarding its portfolio companies and their activities "as a matter of policy." GE, which holds 40 per cent in Genpact, also declined to comment.

Oak Hill and General Atlantic control 60 per cent in Genpact (formerly Gecis), which they bought in 2004 when GE divested its holding for around $500 million.

Earlier this year, Oak Hill led a consortium comprising GenNx360 and Knox Lawrence International to buy out Vertex Data System, a BPO subsidiary of UK-based United Utilities, in a $425 million cash, debt-and-liability readjustment deal.

Industry analysts see logic for the merger because it will allow investors to maximise efficiencies in the two companies' overlapping verticals and geographies and leverage their separate areas of expertise.

Genpact employs around 27,000 people and has a dominant presence in India and operations in China, Hungary, the Philippines, Romania, the US and Mexico.

It serves the banking/financial services, insurance, manufacturing, transportation, automotive and business services verticals.

Genpact is understood to have a topline of close to $650 million (close to Rs 3,000 crore) and is targetting $1 billion by 2008. Vertex revenues were not available.

Vertex has around 9,000 employees, roughly 1,500 of them in India, with 12 units in Europe, the US, India and Canada. It offers a range of services across private enterprise, financial services, utilities, and central and local government sectors.

Oak Hill Capital Partners has a corpus of more than $4.6 billion of committed capital from leading entrepreneurs, endowments, foundations, corporations, pension funds and global financial institutions.