Blackstone’s investment in Intelenet Global Services resulted in one of the biggest exits in Indian private equity history, as well as Blackstone’s largest-ever capital gain on an Asian deal. But this was not the first time the firm had acquired the company. It originally bought the global business process management provider in 2007, before selling it to Serco four years later.
Following the 2015 acquisition, however, Blackstone made significant changes to the senior management team, recruiting Bhupender Singh as chief executive, while former Intelenet CEO Susir Kumar became chairman.
The ex-global COO for retail and commercial banking at Barclays, David Skillen, and Mitchell Habib, formerly of GE and Nielsen, also joined the board and Blackstone created a unique metrics-driven incentive programme for the management team, to ensure they were fully aligned with shareholder value creation.
Meanwhile, Blackstone’s vast global portfolio proved crucial to the company’s growth. Having recruited managing director Bob Barthelmes, formerly of IBM and Misys Corp, to help identify synergy opportunities, Intelenet won 11 of Blackstone’s portfolio companies as customers, equating to around 10 percent of overall revenue at exit. This revenue acceleration was similar to Blackstone’s previous period of ownership when it added seven portfolio companies as customers.
Blackstone also drove revenues by strengthening the sales teams in both Europe and the US and revamping the sales organisation structure to focus on new client wins and pipeline development. It hired new heads of sales in both regions, as well as industry experts to help accelerate global business development.
A focus on the next generation of digital offerings was also key to Blackstone’s value creation strategy. The firm created a dedicated team to develop automation tools, including iPrompto, an analytics tool for unstructured data, iFare, a natural language processing tool to calculate fares, and iCAN, a robotics solution for improving customer experience.
Meanwhile, productivity improvements, pyramid optimisation and portfolio rationalisation led to an improvement in EBITDA margin of 350bps. The deployment of Blackstone’s global portfolio procurement programme, which includes common shared services and IT platforms, realised significant cost savings as well.
Blackstone also institutionalised data-based decision making by putting in place robust reporting systems and monthly review dashboards, and designed and implemented a sophisticated foreign exchange hedging policy which helped the company improve its margins and mitigate the severe blow of Brexit. Around 30 percent of Intelenet’s revenues stem from Europe and despite the fact the pound depreciated by around 11 percent, the company was still able to double its profitability as a result of the hedging policy that had been put in place.
Intelenet was eventually acquired by French company Teleperformance for around $1 billion, generating a money multiple of 3.8 times and an internal rate of return of 62 percent for Blackstone.
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