Scandent buys out Aon arm for $110 mn

By siliconindia staff writer   |   Monday, 04 October 2004, 19:30 IST
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MUMBAI: In one of the biggest cross-border acquisitions in the BPO sector, the Scandent group will pay about $110m to buy a majority stake in the claims processing subsidiary of US-based Aon Corporation. ET broke the story on September 24, saying that Scandent and Aon were in talks and that the buyout, valued at over $100m, would be announced in a fortnight. Industry sources said Scandent and Aon signed the agreement on Saturday. Chicago-based Aon, which is a large insurance brokerage, and risk management and HR consulting firm, will continue to hold a small stake in the company. A formal announcement is expected on Monday evening (IST) as soon as the markets open for trading in the US. Standard Chartered acted as adviser to Scandent. This is the firm’s second major transaction of over $100m in the past three months. The deal is one of the largest in the BPO sector in recent times and comes six months after global giant, IBM, bought domestic firm Daksh in an all-cash transaction worth about $165m. Scandent officials were not available for comment. Aon’s subsidiary, the Cambridge Integrated Services group, has revenues of about $220m. Scandent has long-term plans of transferring most of Cambridge’s work to India, which would cut costs and improve margins for Aon. Aon outsources a lot of its work to Cambridge. The move, if and when it happens, may reduce Cambridge’s revenues, as Aon and other US firms may cut billing rates in tandem with the lower costs. But it would still leave Cambridge as one of the bigger BPO firms in the country with revenues of more than $150m. The Singapore-based Scandent is promoted by a clutch of Indian executives and a few foreigners. Rajat Gupta, the former boss of McKinsey & Co, and Ramesh Vangal, the former chairman of Seagram Asia Pacific, are among its founders, along with the Edgar Bronfman family, the former owners of Universal Studios.