Raman Roy-led Quatrro BPO Solutions is planning to raise $100-150 million from private equity firms to fund acquisitions. The company is particularly looking at a large buy, in the range of $200-300 million.
“This is the right time to raise money. There are some very exciting assets available at reasonable prices. We don’t think debt is a viable option at this point. So, our acquisitions will be funded through equity stake sales,” said Quatrro MD Raman Roy. He refused to specify the quantum of funding.
Quatrro is a business process outsourcing (BPO) firm that provides finance and accounting services, legal solutions, mortgage solutions, risk management and business support services.
In the wake of the global financial crisis, valuations of companies have come down significantly, offering attractive acquisition opportunities for BPO firms such as Quatrro. For instance, the country’s largest IT firm TCS recently bought Citigroup’s captive BPO operations for $505 million. The asking price for the same was $700-800 million a year ago. A source said Quatrro will issue fresh capital to the new investor, leading to stake dilution of its existing investors.
The management holds a majority stake in the BPO firm, while private equity firms Olympus Capital and DE Shaw are the other shareholders. While Olympus had invested $100 million in Quatrro for a ‘significant minority’ stake in 2006, DE Shaw picked up a ‘low, single-digit stake’ in Quatrro in July this year. Quatrro also has a strategic investor in John Keells Holdings, the largest public conglomerate in Sri Lanka, which holds a 44% stake in a group subsidiary.
The BPO firm has had multiple rounds of PE funding, especially at the time of making an acquisition. The investor helps finance the bid and picks up stake in the parent company or a hived-off entity formed after the acquisition. For instance, Quatrro roped in DE Shaw to finance its bid for UK-based gaming company Babel Media.
In April, Quatrro, along with John Keells, bought out RSM McGladrey’s financial process outsourcing (FPO) unit for an undisclosed sum. As part of the deal, John Keells paid $5.72 million for the acquisition and also raised debt for it. It picked up a 44% stake in Quatrro F&A, the new entity formed after the merger of Quatrro’s own finance & accounting unit and FPO.
Quatrro has several subsidiaries, including Quatrro Mortgage Solutions, Quatrro Legal Solutions, Annik Technology Services and Scope e-Knowledge. It employs around 2,000 people and has operations in India, Sri Lanka, China, North America and the UK.
Source: Economic Times