General Atlantic Partners, the Massachusetts-based global investor in IT and business outsourcing, has reached agreement with UK BPO company Liberata over a £160m deal that will eventually give the US firm majority control.
General Atlantic will make an initial investment of $60m for new Liberata shares. A subsequent, secondary offer will be made to acquire up to half of the existing shares for up to a further £100m. The primary investment will be used to enhance the company's balance sheet and to help fund organic expansion and growth through acquisition. The investment will result in a £100m windfall for 400 Deloitte & Touche partners, who were given shares in Liberata when it was spun off from the accountancy firm in 2000. Around 93 per cent of its shares are held in trust by Deloitte partners.
This week Liberata published its financial results for the year ended May 31. The company reported a 20 per cent increase in revenues to £181.3m. EBIT was up 56 per cent to £11.8m. It has a number of leading clients, including UK bank Barclays and Swindon Borough Council. Liberata currently employs approximately 3,000 people in 23 business centres and business technology centres across the UK.
General Atlantic typically invests between $25m and $100m, although it has the scope to make larger investments. The firm has been a leading investor in business process outsourcing in 2002, committing the bulk of the approximately $500m it has invested this year to the sector. BPO is considered likely to become of the most prosperous sectors in the coming years as companies look to focus on core operations. In 1999, the BPO sector was worth $208bn according to research published by Gartner Group, a figure expected to increase to $543bn by 2004.
General Atlantic was established in 1980 and currently has $5bn under management. The firm’s biggest investor is American International Group, which contributed $1bn to General Atlantic in 2000. General Atlantic has invested in over 120 IT companies and has current holdings in over 60 companies, of which almost a third are based outside the United States.