Asia-focused private equity firm Baring PE Asia which is acquiring BPO firm IGT Solutions from Apollo Global is in the process of raising $350 million in debt to finance the $800 million buyouts, said two people aware of the development.
Baring emerged as the highest bidder for IGT Solutions, formerly known as InterGlobe Technologies. IGT is Baring’s third acquisition in the technology services space in the last one year, following the acquisition of Hinduja Global Solutions and Straive.
Aion Capital Partners, a joint venture between Apollo Global and ICICI Ventures, had acquired IGT Solutions for $230 million in 2019.
IGT Solutions, established in 1998, is a business process management (BPM), technology and digital services and solutions company in the travel, transportation and hospitality domain.
The company’s client base comprises hotels, airlines, online travel agencies (OTAs) and travel management companies.
“Baring has tied up the debt financing arrangement for the buyout. They are raising $350 million in debt for this transaction. The financing arrangement has a maturity of 6 years, carrying an interest rate of Libor plus 650 basis points. This will result in a leverage of around 6-6.25 times,” said the first person cited above, requesting anonymity as he is not authorized to speak to the media.
“Investors such as Barclays, Nomura, Canadian pension funds CPPIB and OMERS, KKR Credit and Tor Investments are participating in this debt financing. Buyout funds like Baring have been part-funding their acquisitions through debt for a while now and this has now become a common practice among foreign PE funds that are looking to buy out Indian companies,” he added.
Baring PE Asia declined to comment on Mint’s queries.
Last month credit rating agency Icra upgraded the company to A- from BBB+.
“The rating upgrade factors in the strengthening of IGT Solutions Pvt. Ltd.’s (IGTS) credit profile, supported by widening of its global delivery footprint and scaling up of its business process outsourcing (BPO) services, with support from its IT and digitisation services. These factors have supported the company’s strong financial risk profile, marked by healthy revenue growth, improvement in profit margins and strong debt protection metrics in FY2022. Moreover, the revenue growth momentum is likely to be sustained over the near to medium term, supported by considerable uptick in airline passenger traffic and the tourism sector,” the rating agency said.
“The rating is, however, constrained by the high exposure to sectoral-concentration risks, as most of the revenue is generated from the travel and tourism industry. However, Icra has taken note of the company’s initiatives to diversify its sectoral concentration through new clients in the retail and e-commerce sectors in FY2022,” the rating agency added.
Source: Mint