This story is from May 26, 2015

Genpact eyes Syntel acquisition

Genpact’s principal shareholder Bain Capital has evaluated the acquisition of Nasdaq-listed IT services firm Syntel, triggering speculation about another billion dollar consolidation move in the IT services industry.
Genpact eyes Syntel acquisition
BENGALURU: Genpact’s principal shareholder Bain Capital has evaluated the acquisition of Nasdaq-listed IT services firm Syntel, triggering speculation about another billion dollar consolidation move in the IT services industry.
Bain, along with Genpact, started looking at a possible acquisition of Syntel several months ago. Discussions have made slow progress, people familiar with the matter said.
Genpact started as a business process outsourcing (BPO) firm, but in recent years has been trying to add IT muscle as global clients are increasingly demanding integrated IT-BPO solutions.
Private equity giant Bain Capital bought 30% stake in Genpact for $1 billion in 2012, edging out another contender Apax Partners to emerge as the single largest shareholder in the NYSE-listed company. Since then its stake has come down to 26%.
Genpact was one of the contenders to acquire Igate but was outbid by French IT major Capgemini that bought it recently for $4.04 billion. Syntel, if acquired, would add $1 billion to Genpact’s $2.27 billion revenues, and would bolster the latter’s capabilities in banking and financial services, capital markets and insurance.
Peter Bendor Samuel, CEO of US-based Everest Group, said if the acquisition goes through, it would be a good strategic fit. “Genpact needs to add an IT capability if they are going to successfully play in the transformation market place. Headstrong (an IT services and consulting firm which Genpact acquired in 2010 for $550 million) is not big enough or diverse enough to do the trick. It appears that Genpact finished second in the Igate sweepstakes. With Bain Capital owning a large stake and being on their board, they are being pushed to be aggressive in growth, both organic and inorganic. An IT firm such as Syntel would be accretive to earnings as well as position them well in the changing market place,” he said.


Genpact, which started as a captive arm of GE with significant presence in India, now gets 20.4% of its revenue from the US conglomerate. It employs over 67,000 people in 25 countries.
When TOI contacted Gail Ferrari Marold, VP-brand communications, Genpact, he said, “We do not comment on market rumours.” A Bain Capital spokesperson said, “We have no comments to offer to your query on Syntel.” A Syntel spokesperson said the company does not comment on market rumours and speculation.
Syntel, co-founded in 1980 by Indian-American and IIT-Mumbai alumnus Bharat Desai, is seen as the target for the next big ticket deal making either through a private equity buyout or as part of industry consolidation moves.
Syntel has forecast $985 million to $1.01 billion in revenue for the 2015 fiscal. It gets 90% of its revenues from North America. It has 24,500 employees. The company is betting big on automation.
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