Intelenet to delist Sparsh BPO to avoid conflict of interest

MUMBAI: Close on the heels of bringing in UK’s Barclays Bank as an investor, back-office firm Intelenet Global Services is delisting its domestic arm Sparsh BPO. Intelenet CEO Susir Kumar said the decision to delist was taken to avoid conflict of interest between Intelenet and Sparsh because Intelenet was also winning a number of domestic contracts.

“Increasingly, domestic clients want the contracts to be with Intelenet because it is the bigger entity. To avoid a conflict of interest, we have decided to delist. Technically, there are also several tenders that Sparsh cannot bid for, because eligibility criteria require the bidder to be above a certain size,” said Mr Kumar.

Intelenet and SKR BPO Services, the holding company for Intelenet, together hold 75% in Sparsh BPO, which is listed on the BSE. A delisting will take Sparsh private and make any potential stake sale transaction in the firm easier.

Early this year, ET had reported that private equity investors in Genpact had shown interest in acquiring Intelenet attracted by the growth potential of its domestic business. However, Mr Kumar denied that this was the motivation behind the delisting of Sparsh. “We absolutely don’t want to sell,” he said.

Intelenet’s management, which owns around 16% equity in it, wants to eventually take the combined entity public and Mr Kumar said having Sparsh as a listed entity could confuse Intelenet’s valuation, as well as lead to confusion on the brand.

A sizeable chunk of the 25.06% public shareholding in Sparsh is controlled by three large shareholders, Kapil Puri and his family, Shyam Telecom and Reliance Capital. Together they hold nearly 14% in the company and could determine the price at which the stock is de-listed.

“Under the delisting guidelines if the promoters’ stake crosses 90%, they can move Sebi to get delisted. If any minority shareholders choose not to tender their shares, they can continue as shareholders and they will be entitled to dividend, attend general body meetings etc. But the stock will not have any liquidity because it will cease to be traded,” said Pranay Bhatia, associate at legal firm, Economic Laws Practice.

Kapil Puri, the original promoter of Sparsh, holds the largest chunk of around 6%. In 2005, Mr Puri sold 51% in the entity to Intelenet but he continued to retain a minority stake. When contacted Mr Puri said, “Yes, I am aware they are going to de-list but I haven’t decided anything about the price. It will be according to the formula prescribed by Sebi.”

Shares of Sparsh hit the upper circuit limit on Monday, rising 10% to close at 78.10, on BSE. The process for determining the de-listing price is through reverse bidding.