Private equity firms including Apax Partners, Blackstone and Providence Equity Partners are seeking to acquire a stake of as much as 88 percent in Firstsource Solutions, an Indian BPO company, according to Reuters.
Other firms interested in the deal are ICICI Venture and Kohlberg Kravis Roberts, the wire quoted other media reports as saying.
Firms are beginning to team up for the bid, Reuters reported people familiar with the matter as saying. It is not yet clear which firms will come together for the first round bids that are expected to be held in the coming weeks.
Among those interested in divesting their stakes are India’s largest private sector bank ICICI, Singapore’s Temasek Holdings-owned Aranda Investments and Metavante, a US-based company providing banking and payment technology services. The three together own 68.3 percent of the company. Any deal would also include an open offer for another 20 percent of shares according to Indian regulations.
The three sellers are looking at a price of 64 Indian rupees ($1.33; €0.98) a share, valuing the firm at $580 million (€427 million), Reuters said. They are all being advised by Goldman Sachs. Firstsource shares have dropped more than 60 percent in 2008, and were trading at 26.3 rupees a share on Monday, the lowest since the firm listed in February 2007.
There are concerns that the deal price is too high, and the final price is likely to be below 50 rupees a share owing to the low stock price of the company, the report added. Furthermore, the company has a $275 million bond convertible into equity by 2012 at three times the current price and the bond holders have a right to veto the sale of a large stake.
“The timing for the agreement boils down to the price. The controlling stake is juicy enough and bidders are aplenty to command a premium, but the asking price is way too high,” the report quoted a source as saying.
In July 2007, Blackstone acquired Intelenet, another Indian BPO firm for about $200 million. A successful bid for Firstsource could provide it with consolidation opportunities.