Temasek, GAP may buy into ICICI OneSource

By siliconindia staff writer   |   Wednesday, 21 April 2004, 07:00 Hrs
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MUMBAI/NEW DELHI: Private equity funds led by Temasek Holdings, the investment arm of the Singapore government, and General Atlantic Partners (GAP) are in active negotiations with the promoters of ICICI OneSource — ICICI Bank and ICICI Venture Fund — exploring the possibility of picking up a stake in the BPO firm, reports Economic Times.

Sources familiar with the process said that negotiations with ICICI OneSource’s promoters were currently on after the funds expressed interest in picking up a substantial stake. Apart from Temasek and GAP, two other private equity funds are also in dialogue with ICICI OneSource. Their names could not be ascertained.

“The private equity fund(s) may not buy out existing promoters, but one of the investment options for them would be through a preferential allotment of shares whereby they pick up fresh equity. The company would increase its capital base in that case,” sources said.

ICICI OneSource has no individual promoters. Venture Capital firm WestBridge Capital holds 8-9% of the firm’s shares, ICICI Bank and ICICI Venture together hold in excess of 65% and the rest of the shares are held by the firm’s management and key employees through stock options. Industry sources suggest that the firm was on the lookout for strategic investment and has been valued between $60 million and $80 million.

According to sources, it’s highly unlikely that WestBridge will offload its holding in favour of another private equity fund.

An ICICI OneSource spokesperson, when contacted, said, “We are in discussion with several potential investors. However, it is premature to discuss anything further at this point.”

During July 2003, ICICI OneSource acquired FirstRing in cash (for an undisclosed amount) after it partially bought out stakes of WestBridge Capital Partners, Hero group and Silicon Valley-based investor Ravi Sethi in a stock-swap. The acquisition gave ICICI OneSource access to FirstRing’s operations in India and the US . WestBridge Capital was a common investor for both ICICI OneSource and FirstRing.

ICICI OneSource employs close to 3,500 people and has a seat capacity of 2,000. The firm has four centres in Bangalore and Mumbai, and a fifth one in the process of being set up in Mumbai.

During February, Temasek Holdings raised its stake in ICICI Bank to 7.3% from 6.7% held earlier. The government of Singapore , through its entities, controls 14.12% in ICICI Bank as on March 20, and is the second-largest shareholder after Indian financial institutions, which control over 15% in the bank. These include LIC, GIC and other PSU non-life insurers and UTI.

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