Outsource companies prepare US listings

By Sundeep Tuckerin Hong Kong

FINANCIAL TIMES
Published: March 28 2007 03:00 | Last updated: March 28 2007 03:00

Two of the world's largest business process outsourcing (BPO) companies, both of whom boast significant operations in India, are preparing to list in the US later this year to take advantage of strong investor interest in the fast-growing sector.

Genpact, which is based in New Delhi, and Sutherland Global Services, which is headquartered in Rochester, New York, are each plotting to join either Nasdaq or the New York Stock Exchange, listings which bankers believe could raise a combined $1bn.

Genpact has appointed three US investment banks, Morgan Stanley, JPMorgan and Citigroup, to help with a summer listing. All three banks declined to comment.

Genpact was formerly known as Gecis, the outsourcing company created in 1997 by General Electric. It has 26,000 staff and annual revenues of $600m.

Its listing is expected to raise $600m and value the company at more than $4bn. Its main shareholders are Oakhill Capital and General Atlantic, two US private equity firms, and General Electric.

Sutherland, which started in 1986, employs 18,000 staff, more than half in India, and earns annual revenues of $300m a year.

It is expected to raise about $250m in a fourth-quarter listing, valuing the company at $2bn. This month it held a beauty parade of investment banks, and is expected to choose its advisers next month.

Its largest investors include Dilip Vellodi, founder chairman and chief executive, Oak Investment Partners, a US fund, and Standard Chartered Private Equity.

The moves follow last year's successful listings in the US of the duo's smaller rivals WNS and EXL, which also employ thousands of staff in India. Xchanging, a London-based outsourcing company, also announced earlier this week plans to raise £150m ($295m) through a float on the London Stock Exchange.

BPO provides services such as process consulting, back-office processing, account management, customer care and technology support.

Earnings growth in the BPO sector is running at about 35 per cent per annum, outstripping even that of India's world-class IT services sector.

People familiar with the situation said that the owners of BPO companies were attracted by the high valuations that US investors placed on the sector.

According to Dealogic, the data provider, the listing of EXL on Nasdaq last October was 30 times over subscribed, while its share price is up 68 per cent since flotation.

WNS, which listed on the NYSE in July, is up nearly 50 per cent.

Genpact and Sutherland declined to comment.