The Hindu Business Line : EXL targets buy-outs next year; E. Europe on co’s radar

New Delhi, Dec. 28 Armed with $90-million cash on its balance sheet, Nasdaq-listed BPO company ExlService Holdings Inc is planning to go full-steam ahead on acquisitions in 2008.

The company — which is scouting for buy-outs in Eastern Europe, and also eyeing companies offering strong capabilities within domains such as BFSI — is open to acquisitions in $50-100 million range.

“We are very hopeful of doing an acquisition in 2008. We did not do any acquisitions in 2007 and looking back, that strategy worked out well as valuations of the target firms are now a fraction of what they were in the first half of 2007. Also a lot of companies which were eyeing public offering were not available for acquisitions then, and some of them have now figured out that partnering is a good option going forward,” Mr Rohit Kapoor, President and Chief Operating Officer of EXL, said.

Enhancing capacity

He said that the company also felt that it is key to focus on diversification, besides size and scale. “Eastern Europe is definitely a priority for us. We are also keen on companies that add to our capabilities in existing domains. For instance, within the insurance space, we will be interested in adding capabilities in health insurance, and also to acquire technology tools and platforms,” he said.

The company also feels an acquisition would be in order for customer base and service delivery (location) diversification.

In July 2006, EXL had announced the acquisition of Inductis, a strategy and analytics company serving the financial services and insurance industries.

Asked if the company would go for cash-cum-stock route for future buy-outs, Mr Kapoor said, “In professionals services and people business, equity should be used for correct alignment between team of the acquired company and the parent firm. Even in the case of Inductis acquisition, we used more equity than cash and that remains our preferred model.”

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EXL targets buy-outs next year; E. Europe on co’s radar