| In focus: EXL Service |
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| Friday, 27 October 2006 | |||||||||||||||
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Following closely on the heels of WNS Global Services, another BPO provider EXL Service closed its IPO on NASDAQ this week.
Following closely on the heels of WNS Global Services, another BPO provider EXL Service closed its IPO on NASDAQ this week. The IPO, priced at $13.50 per share, opened at $15.95 and ended the day at $18.84. The company raised about $68 million from the IPO, offering 5.75 million shares, including 750,000 shares with underwriters. The company will utilize funding from the issue for redeeming its debt and for general working capital requirements. EXL Service was incorporated in the US in April 1999. US-based insurance company Conseco acquired EXL in 1999, but after Conseco's bankruptcy, EXL became an independent third party vendor backed by private equity investors and members of the senior management team of the company. Oak Hill Capital Partners and Financial Technology Ventures hold a majority stake in the company. In April 2004, Aviva Plc bought a minority stake in EXL Service.
The company, which had applied for an IPO way back in December 2004, was one of the first companies to plan a US listing at that time. But since then, the company has witnessed a number of changes, and the IPO was on hold for almost two years. Significant among these were at least three top level managerial exits in 2005 - the country manager, hiring head and insurance practice head - and the loss of key client Dell after which the company exited the IT helpdesk services business. In August 2006, EXL cut back its IPO size from the proposed $75 million to $60 million, and finally went ahead with the listing in October 2006. EXL Service is regarded as one of India's premier BPO services provider, with strong domain expertise in BFSI due to its captive legacy. The company is trying to boost its offerings across the value chain, and the acquisition of analytics services provider Inductis in August 2006 has been important in this regard. In two separate ValueNotes research studies on banking & financial services and insurance offshoring, EXL Service has emerged as one of the largest and strongest BPO services providers in India, with strong domain expertise. The NASDAQ listing will enable EXL to achieve significant scale going forward.. Thanks to active interest by VCs and private equity investors, money does not appear to be a significant problem for best-of-breed BPOs. However, a listing, particularly in the US, carries its own set of advantages - better visibility among multinational buyers, credibility, brand building and higher liquidity. Size and scale, along with domain expertise, will be imperative, if the pure-play BPOs have to compete with the likes of Accenture, Cap Gemini or EDS. Several other Indian BPOs are likely to adopt the route that WNS and EXL Service have taken, with Genpact most likely to be next in line. Related Items: |
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ValueNotes’ research indicates that the domestic BPO industry stands at an inflection point, with the growing scale of Indian buyers as well as the emergence of significant vendors with greater capabilities