Mumbai Asia-focused private equity firm Baring PE Asia, which is acquiring BPO firm IGT Solutions from Apollo Global, is in the process of raising $350 million in debt to finance an $800 million purchase, two people informed of the development .
Baring emerged as the highest bidder for IGT Solutions, formerly known as InterGlobe Technologies. IGT is Baring’s third acquisition in the technology services space in the past one year, following the acquisition of Hinduja Global Solutions and Strav.
Aeon Capital Partners, a joint venture between Apollo Global and ICICI Ventures, had acquired IGT Solutions in 2019 for $230 million.
IGT Solutions, established in 1998, is a business process management (BPM), technology and digital services and solutions company in the travel, transportation and hospitality sectors.
The company’s customer base includes hotels, airlines, online travel agencies (OTAs) and travel management companies.
“Baring has made debt financing arrangements for the buyout. They are raising $350 million in debt for this deal. The financing arrangement has a maturity of 6 years, with LIBOR interest rate plus 650 basis points. This would result in a profit of around 6-6.25 times,” said the first person cited above, requesting anonymity as he is not authorized to speak to the media.
“Investors such as Barclays, Nomura, Canadian pension fund CPPIB and OMERS, KKR Credit and Tor Investments are participating in this debt financing. Buyout funds such as Baring have been partially funding their acquisitions through debt for some time and this Now it has become a common practice among foreign PE funds who want to buy Indian companies.
Baring Pei Asia declined to comment on Mint’s questions.
Last month, credit rating agency Icra upgraded the company from BBB+ to A-.
“The rating upgrade factors in the strength of IGT Solutions Pvt. Ltd.’s (IGTS) credit profile, supported by the widening of its global distribution footprint and the expansion of its Business Process Outsourcing (BPO) services with support for its IT and digitization services. The factors have supported the company’s strong financial risk profile, marked by healthy revenue growth, improving profit margins and strong debt protection metrics in FY 2022. Further, the pace of revenue growth should remain in the near to medium term. This is likely to be supported by substantial growth in airline passenger traffic and the tourism sector,” the rating agency said.
“However, the rating is hampered by the high risk of regional-concentration risks, as most of the revenue is generated from the travel and tourism industry. However, ICRA has taken note of the company’s initiative to diversify its regional concentration through new customers in the retail and e-commerce sectors in FY22.”