Aditya Birla Group to sell its BPO firm Minacs for Rs 1,600 crore; marks exit from ITeS sector

MUMBAI/BANGALORE: The $40-billion Aditya Birla Group is close to selling its Bangalore-based business process outsourcing (BPO) firm Minacs to a private equity consortium structured by tech entrepreneur-turned-investor Sanjay Chakrabarty for about $270 million, or around Rs 1,600 crore, said people directly familiar with the matter.

This would mark the Kumar Mangalam Birla-led group's exit from ITeS sector, where most of the traditional Indian business conglomerates have struggled to manage large operations. Minacs, which employs 21,000 people across 35 locations in the world, is the country's sixth largest BPO firm, according to Nasscom rankings.

Aditya Birla Minacs Worldwide has a revenue of $450 million and an operating profit of $40 million. The bid values the company at six to seven times its operating profit even though Birla's asking price was slightly higher. Minacs provides back office work on marketing, finance and accounting, procurement and IT solutions for clients.




The investor consortium has entered exclusive final discussions for a buyout, and a deal could be signed within a few weeks, if there are no last-mile hurdles. Chakrabarty, who founded MobiApps and later turned a PE investor, is being backed by a group of other investors who would have majority shares of Minacs. There names were not immediately known.

A spokesperson for Aditya Birla declined comment and so did Sanjay Chakrabarty, when contacted.

Chakrabarty, married to award winning Bengali actress Rituparna Sengupta, is in the midst of launching an Asia-focused buyout private equity fund. With Minacs, he would have pulled off two of the biggest M&A deals in Indian IT industry in the past one year.

Last year, he sourced and structured a deal involving European PE firm Partners Group's acquisition of Chennai-based CSS Corp for $270 million. He co-led the buyout and retains a minority stake and board seat in the IT services company, previously owned by Goldman Sachs, SAIF Partners and Sierra Ventures. He would follow a similar trajectory in the Minacs deal as well, structuring and partnering in a transaction with a minority stake and board presence. Kedaara Capital along with UK-based PE Clayton Dubilier & Rice and TA Associates had separately looked at acquiring Minacs, but dropped plans giving Chakrabarty exclusivity a few months ago.

Minacs, a wholly owned subsidiary of Aditya Birla Nuvo, was formed when BPO firm TransWorks acquired North American CRM services company Minacs in 2007. India's $20-billion back office outsourcing industry is facing a big shift with integrated IT-BPO companies outdoing pure-play BPO firms, exploring consulting and technology synergies to open new accounts. Standalone BPO companies0020 — WNS, EXL Services and Genpact — have lowered their full-year revenue guidance for 2013.

Nevertheless, the industry is looking at consultative-led approach and outcome-based model to mine accounts moving away from a labour arbitrage model. This is work-in-progress even as the sector, which hopes to touch $50 billion by the year 2020 growing at a CAGR of 13%, is seeing broader shifts in the industry.