The quarter numbers have turned out to be a bitter-sweet pill for this ITES pack, but the India-centric BPO providers listed overseas – Genpact, WNS and EXLService Holdings – have bolstered their combined cash kitty by nearly six per cent as on June 2009 over the preceding quarter.
War chest
The three US-listed companies now have a cumulative cash war chest of over $530 million, and Genpact and EXL say they are scouting the deal street for lucrative buys.
“We will utilise funds for merger and acquisition (M&A) activities. The interest areas for us are analytics, finance and accounting, domestic business and point technology solutions,” says Mr Pramod Bhasin, President of the NYSE-listed Genpact.
At the end of the June 2009, the BPO firm had about $367 million in cash and cash equivalents, short-term investments and short-term deposits ($348 million on March 2009). Genpact’s past acquisitions include Axis Risk Consulting Services, an independent India-based risk consulting firm offering risk assurance services during 2007; and acquisition of a delivery centre in Guatemala City from GE Money in 2008.
Like Genpact, its smaller rival EXL too is on the prowl for buy-outs.
“We can utilise between $60 million and $75 million for acquisitions, but will keep $40-50 million cash on the balance sheet at all times,” says Mr Rohit Kapoor, President and CEO of EXLService, which last month bought Schneider Logistics’ business process services operations in the Czech Republic.
On the prowl
The Nasdaq-listed pure play firm is keen on acquisitions in verticals such as insurance, utilities and banking and financial services, and is hopeful of completing one such buyout by the year-end.
While it continues to look out for small takeovers, EXL’s inorganic ambitions also entail “very large acquisition”.
“The sweetspot for us is the $60-75 million space but we have the flexibility to also pursue acquisition as large as $150-200 million. We can support this through a combination of stock and cash, and have the ability to borrow money,” Mr Kapoor pointed out.
EXL has close to $114.3 million of cash on its balance sheet.
Meanwhile, NYSE-listed WNS’ cash balance stood at $50.3 million as of June 2009. The company has made a voluntary prepayment of $5 million on the $200-million term loan – associated with Aviva Global Services acquisition – in April 2009 and another in July 2009, in addition to the scheduled repayment of $20 million, also in July 2009.
Source: The Hindu Businessline