Serco Group in talks to acquire Blackstone stake in Intelenet

MUMBAI: UK-based Serco Group is in discussions to acquire a controlling stake in India's largest unlisted back-office provider, Intelenet Global Services, people familiar with the discussions said.

Private equity firm Blackstone, which holds over 66% in Intelenet, plans to exit by selling its stake to Serco if an agreement on valuation for the back-office firm is reached, at least three people with knowledge of the transaction told ET.

"The negotiations are progressing well-a deal is very likely but as in any such transaction, nothing is final till it is actually done," one of the three people said.

Going by the valuation that BPO provider EXLService Holdings acquired Outsource Partners International (OPI) for last week, Intelenet with revenues of around $250 million is likely to be valued at around 1,000 crore.

Intelenet is one of Blackstone's early investments in India and among its more profitable ones. The PE player has been under pressure to show returns from its India investments, said one of the people. The world's biggest PE firm, Blackstone, has invested over $700 million in Indian businesses, many of them listed entities. In 2007, at the peak of the BPO boom, it invested $200 million in Intelenet in a management-led buyout.

Serco, which is a provider of support services, acquired an India footprint three years ago through its acquisition of Infovision, a domestic BPO firm. Since then, it has been hunting for more buys to boost its outsourcing capability, said industry watchers. A spokesperson for the Serco Group, Marcus De Ville, said the company does not comment on rumour or speculation in response to an email from ET asking for confirmation.

Blackstone officials did not respond to calls. An email sent to Amit Dixit, Blackstone's investment manager for Intelenet, also did not get a response. People close to Blackstone and Intelenet said the company was also working towards an initial public offering and is preparing its accounts with a view to a listing in the next 9-10 months. "In the event of the deal not going through, Blackstone may sell part of its holdings in the IPO," the person said.

Intelenet CEO Susir Kumar also did not comment. A few months ago, Intelenet had delisted its domestic BPO subsidiary, Sparsh BPO, which had attracted considerable buyer interest. However, at that time, Kumar had denied this was the reason behind the delisting. Intelenet's management-the senior leadership led by Kumar-holds about 16.5% in Intelenet. The management's stake has a tag-along clause, which means in the event of Blackstone selling its stake, it can also tag along and sell its stake to the buyer.