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Essar sells BPO unit Aegis to Capital Square Partners

LiveMint logoLiveMint 03-04-2017 Swaraj Singh Dhanjal

Essar Group has agreed to sell its business process outsourcing (BPO) unit Aegis Ltd to private equity firm Capital Square Partners in a deal that two people aware of the development said was worth as much as $300 million.

Essar, which is exiting the BPO business, will use the proceeds of the sale to repay debt. The transaction is expected to close in the current quarter, subject to receipt of regulatory approvals.

“This transaction is in line with our strategy of incubating, building and operating world-class businesses, and being open to monetizing them at a premium value when the market conditions are favourable,” Uday Gujadhar, director at AGC Holdings Ltd Mauritius, a holding company of Aegis, said in a statement on Monday.

Singapore-based Capital Square Partners has deep domain expertise and an understanding of South-East Asia to ensure that the company continues to grow, Gujadhar said.

Financial details of the transaction were not disclosed. The two people cited above spoke on condition on anonymity.

Aegis has clients in multiple sectors including telecom, technology, media, banking, financial services and insurance, travel and logistics, retail and e-commerce.

The company employs 40,000 people across 47 offices worldwide, offering services including lifecycle management, technology services, back-office services and social media analytics. Its annual revenue is around $400 million.

Sanjay Chakrabarty and Mukesh Sharda, managing partners of Capital Square Partners, said in a joint statement: “We are excited about the opportunity to work with the Aegis management team in embarking on the next stage of growth, by focusing on innovation and adding our sector knowledge and expertise.”

Capital Square Partners has in the past invested in technology services and BPO sectors, including its acquisition of Minacs Ltd in early 2014; Minacs was subsequently acquired by Synnex Corp. in 2016 and merged with its unit Concentrix.

The Aegis sale comes on the heels of Essar Group selling Essar Oil Ltd in a $13 billion transaction with Rosneft PJSC, Russia’s biggest listed oil producer, and a consortium of Trafigura and United Capital Partners. The deal in October last year marked the biggest foreign direct investment in India till date.

The transaction was an outcome of debt-related stress in the Essar Group, which at the time of the Essar Oil sale had debt of Rs1.3 trillion, according to an estimate by Kotak Institutional Equities.

Like other debt-laden conglomerates, Essar has been seeking to raise funds through asset sales to pay creditors. In January, Press Trust of India reported that private equity investor Farallon Capital was in talks to acquire a 24% stake in Essar Steel Ltd for $250 million. Essar’s advisers in the Aegis transaction included Axis Capital as financial adviser, and Platinum Partners and Sidley Austin as legal advisers. Shearman & Sterling and Shardul Amarchand Mangaldas acted as legal advisers for Capital Square Partners.

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