ICICI, Temasek mull exit from Firstsource

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New Delhi: ICICI Ventures, Singapore state investor Temasek Holdings and US banking technology group Metavante are considering an exit from the country’s sixth-largest business process outsourcing (BPO) firm, Firstsource. This comes more than a year after their first failed attempt to offload their investments. The three together own 68% in Firstsource, according to sources.

Citibank has been appointed merchant banker for the deal, which at the current market price has been valued at $285 million. Chanda Kochhar, CEO & managing director of ICICI BANK, whose ICICI Ventures arm holds around 26.6% stake in Firstsource, on Monday said her bank would have to gradually reduce its stake in the BPO firm, but ruled out any immediate action.

“There is no real concrete thing of that kind. As per US Fed guidelines, over a period we are regulatorily bound to reduce our stake in some companies,” Kochhar said on the sidelines of the ongoing India Economic Summit. She added that there has been stipulation for an exit for quite some time, but that “there are no specific steps we are contemplating right now”.

As earlier reported by FE, several PE firms are looking to exit Indians BPO firms as their investment cycles in them are coming to an end. Improvement in domestic stock markets has spurred talks between players, which could also spark consolidation in the industry. Both PE firms and IT service providers could be interested in snapping up a stake in Firstsource. However, sources said it is too early to comment on potential buyers.

While the ICICI, Temasek’s Aranda Investment and Metavante stakes are valued at $220 million, a buyer would need to launch an open offer for an extra 20% in the company.