Global BPO providers Sutherland Global Services and Genpact are in the final race to acquire Apollo Health Street, the healthcare business process outsourcing (BPO) arm of Apollo Hospitals, in a deal valued at over Rs 1,100 crore ($220 million).
Sutherland, which has allegedly put in a higher bid, may be the front-runner to buy the asset even though both contenders are completing the due diligence process. Apollo Hospitals and associates hold about 54% stake, while Temasek Holdings, One Equity Partners and other financial investors have the remaining shares in the 12-year-old BPO firm. Barclays and Kotak Mahindra Capital are advising the promoters on the potential sale process.
Proservartner Point of View:
The US Healthcare Industry has long been focus for BPO providers for the last 18 months, and given the presence, the client relationships that Apollo has developed in this area, and the fact that Apollo considers its BPO unit as a non core investment, it is ripe for acquisition.
The transaction is expected to value Apollo Health Street at about two times revenue, which is estimated at a little over $100 million. Genpact will be viewing this target as a strategic decision to increase market share in the Healthcare market, aligned with its approach on verticalisation. On the other hand, privately held Sutherland will be keen to acquire a revenue generating asset that will provide a differentiator within US Healthcare.
If I were a betting man, I can envisage Sutherland offering a higher price, and more flexible on Apollo BPO keeping a stake (which is important for Apollo), hence may have a better chance of winning!
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