Will Genpact's Pramod Bhasin be the last man standing in race to buy Citigroup's captive BPO-Citigroup Global Services? NDTV has learned that the deal is almost through and a final announcement is due soon.
According to sources Genpact is likely to pick up 80 per cent in Citigroup Global Services. With revenues of around $400 million Citigroup Global Services (CGS) is valued at over a billion dollars.
Genpact is reportedly paying around $750-800 million while a consortium of WNS and Warburg Pincus were also in race. The Citi acquisition will give Genpact more exposure in the banking space.
But Citi and Genpact denied these moves saying “There is absolutely no truth in the news. You cannot expect me to comment on market speculation,” said Pramod Bhasin, President & CEO, Genpact.
To boost valuations
A clutch of PE investors APAX, 3i and suitors like TCS, IBM were also in the fray. But sources say that Genpact bid aggressively to boost valuations before its IPO at NYSE.
Captive BPOs especially in the banking and financial vertical is big business. From HSBC to Barclays to Stanchart all have back offices in India.
It is a big growth area, 60 per cent of revenues of India's $8 billion BPO industry comes from the financial vertical, which is why Citi was not keen to opt out of its BPO entirely but for captive units where costs are higher by at least 40 per cent.
So after WNS Holding and Genpact, Citi too is under pressure to compete with more cost competitive third party outfits. After selling its BPO will Citigroup continue to give business to the BPO? In the short term it is likely to do so making the BPO attractive.
Source : NDTV Profit