Barings lead suitor for acquiring healthcare arm of Hinduja Global Solutions

Diversified conglomerate Hinduja Group’s plans to unlock value in its BPO arm Hinduja Global Solutions with the sale of a carved out business vertical have reached an advanced stage, people familiar with the matter told Moneycontrol.

“Currently, Barings Private Equity Asia has emerged as the lead contender to acquire the demerged healthcare vertical of Hinduja Global Solutions. The PE fund is a formidable player in the technology segment,” said one of the persons cited above.

A second person said they (Barings Private Equity Asia) have completed a major portion of the due diligence and have an edge over other suitors in terms of valuations and are also keen on buying out 100 percent stake in the Hinduja unit.

On December 8, 2020, Moneycontrol was the first to report that Hinduja Global Solutions had appointed investment bank Barclays as advisors and was looking to hive off its cash-rich healthcare vertical and raise funds by selling stake to private equity investors. The vertical is performing well and has global presence and hence Hinduja Global Solutions was keen to encash it and focus on other businesses, the report had added.

“ A consortium of Everstone Group and Goldman Sachs is another suitor in the fray for the deal,” said a third individual tracking negotiations who also confirmed that Barings Private Equity Asia was ahead in the race.

All the three individuals spoke to Moneycontrol on the condition of anonymity.

In response to an email query from Moneycontrol, Hinduja Global Solutions said, “In view of changing market dynamics and the need to enhance profitability, the HGS Board of Directors had asked for a review of our existing portfolio of businesses to unlock higher value. We had communicated this to the stock exchanges on September 7, 2020. We have no further comments on speculations in news media.”

Barclays and Goldman Sachs declined to comment. A response is awaited from Everstone Group.
On May 6, 2021, the Economic Times reported that Everstone Capital and Barings Private Equity Asia were frontrunners for picking up a majority stake in the carved out healthcare outsourcing division of Hinduja Global Solutions.

The Indian portfolio of Barings Private Equity Asia includes firms like Hexaware, Virtusa, Citius Tech, Coforge ( formerly called NIIT Technologies), CMS, AGS Health and RBS Bank. Reports indicate the PE firm has put delisted IT firm Hexaware on the block for $2.5 to $3bn.

According to a company presentation released on February 18, 2020, Hinduja Global Solutions is in the business of inbound voice & non -voice (transaction processing+ digital). As on December 30, 2020, the firm had 59 worldwide centres, 49,100 plus employees and 244 active clients for the BPM ( business process management) business. Additionally, it had 704 clients for the payroll and HRO business.

For FY20, it had revenues of $737 million, ebidta of $101 million and ebidta margin of 13.7 percent.

Over 55 percent of the firm’s revenues come from healthcare, and the balance from telecom and media, consumer, BFS ( banking and financial services), the company presentation said. It has miniscule exposure to the travel and hospitality segments. The healthcare vertical is US focused , has 35-plus clients and 24,000 employees across 34 locations in 5 countries, the presentation added.

In November 2019, Hinduja Global Solutions announced the sale of its India customer relationship management business to BPO operator Altruist India. According to Gartner, global BPM spending is growing at a CAGR of 5.1 percent and is estimated to touch $206.7 billion in 2022. Moneycontrol