BPO firm Zenta plans US listing before mid '08

MUMBAI: Third-party BPO operator Zenta (earlier H-Cube) is planning to tap the capital market. The firm is backed by the US-based private equity player GTCR Golder Rauner. The company looking to list on the US stock exchanges. However, the exact timing of the IPO will hinge on how fast the company is able to meet its internal growth targets, a significant part of which will come from acquisitions. “The issue could happen in the first half of 2008, if we grow according to plans,” president and COO Jack Freker, who was recently on a visit to India, told ET.

Before going public, the company has recently integrated three of its subsidiaries and merged them with itself to create a single entity, and also appointed a country manager, Jaswinder Ghumman. The new entity created from the merger of Zenta, Global Realty Outsourcing, Blackheath Financial and H-Cube is named Zenta. It has revenues of around $100 million and is growing at around 38% year-on-year.

“We are about the same size as EXL Services when it went public,” Mr Freker said. However, the company will come with an IPO only after it acquires more companies to attain size. The acquisition kitty could be as big as $500 million with potential targets in India and other offshore locations such as Eastern Europe as well, according to Mr Freker. The acquisitions will be funded through a combination of debt and equity. “GTCR has committed $100 million in equity capital, so we still have some funds left for acquisitions. We also have the ability to raise debt,” he added.

The genesis of H-Cube as a BPO firm was also through acquisitions. A partnership between Henry Hortenstine and GTCR, it acquired the Mumbai-based Zenta, which was owned by real estate group, Hiranandani, in May 2005. This firm was in consumer credit BPO and also had call centre operations. In December 2005, H-Cube followed it up with another acquisition - that of Chennai-based Global Realty Outsourcing in the mortgage business - and in 2006 with the acquisition of the New York-based BlackHeath Financial. Mr Freker, who was earlier president of the customer management group at Convergys, joined the firm in 2006.

Around 45% of Zenta’s business is voice-based and 55% is from non-voice based processes such as data analytics. “We are not affected by the slump in the sub-prime lending segment because we are in the commercial mortgage space.