Genpact buys Headstrong for $550 million, gets into IT services in big way
Wednesday, 6th April 2011
Genpact Limited (NYSE: G), a global leader in business process and technology management, today announced that it has signed a definitive agreement to acquire Headstrong Corporation, a global provider of comprehensive consulting and IT services with a specialized focus in capital markets and healthcare, for cash consideration of $550 million. Genpact expects the transaction to be accretive to earnings per share on a GAAP basis in 2011. The transaction is being funded by a combination of existing cash and acquisition financing, and is expected to close by May 31, 2011, subject to customary regulatory and other conditions.
�Headstrong is a complementary high-growth business, built by talented leaders, that is an excellent fit strategically, financially, operationally and culturally. With this acquisition, we are gaining critical domain and technology expertise in the complex, but highly attractive, capital markets industry vertical. This expertise � combined with our capabilities in business process management (BPM) and Smart Decision Services that encompass analytics and reengineering � will create a uniquely powerful value proposition for clients,� said Pramod Bhasin, president and CEO of Genpact.
Headstrong is a recognized leader with formidable domain expertise in several segments of the capital markets industry vertical, such as asset management, derivatives, wealth management, prime brokerage, reference data, compliance and mortgages. With a strong mix of onsite and offshore expertise, Headstrong counts nine of the world�s top ten investment banks and three of the top five asset managers as clients. The company also has an emerging practice in healthcare administration. Headstrong has approximately 3,700 employees in seven countries and generates a significant amount of revenue from employees who are onsite with clients in the United States, the United Kingdom and Japan. Headstrong generated revenues of approximately $217 million in 2010 and Genpact expects Headstrong�s long-term growth rate to be in excess of 20% per year.
�This transaction is the next stage of our evolution and it immediately positions Headstrong to emerge as the global leader in domain-led services to the capital markets,� said Sandeep Sahai, CEO of Headstrong. �Our companies� combined offerings create a compelling value proposition, with significant potential to offer Genpact�s extensive expertise in business process management, reengineering, high-end analytics and infrastructure support to our clients. We are also excited about adding our capabilities to Genpact�s strong client portfolio in the banking, financial services and insurance markets. Our geographical footprint will also increase, allowing us to provide these enhanced services from more locations, including in the U.S., Mexico, Poland, Hungary and China. Finally, we are all thrilled to join the Genpact team.�
Genpact�s Chief Operating Officer Tiger Tyagarajan said, �We are combining forces for our clients who seek a nimble provider with global scale, specialist knowledge and end-to-end solutions, such as through Smart Enterprise Processes (SEPSM). By enhancing our domain expertise, we can more broadly deliver our end-to-end solutions to clients in specific industry verticals. The acquisition of Headstrong will also help us expand operations in the U.S. and shift our center of gravity to be even closer to our clients.�
Genpact�s SEPSM framework and Smart Decision Services will complement Headstrong�s technology and domain capabilities. As a result, the newly-expanded company will be able to meet the growing needs of companies in the capital markets, financial services and healthcare verticals for governance, risk, compliance and back-office processing services. Sandeep Sahai and his management team will lead Genpact�s capital markets industry vertical and build the combined services and solutions that clients are seeking.
Citigroup Global Markets Inc. and UBS Securities LLC acted as the financial advisors to Genpact in this transaction and Cravath, Swaine & Moore LLP acted as outside legal counsel. Morgan Stanley & Co. Incorporated acted as exclusive financial advisor to Headstrong in this transaction and Kirkland & Ellis LLP acted as its legal counsel.
Headstrong is a global consulting and IT services company with a specialized focus in financial services. With three decades of domain expertise, Headstrong is the world�s leading offshore outsourcing company for the capital markets and securities industry. Headstrong delivers targeted domain solutions and a full complement of services, from strategy and business consulting to technology and operations, using multi-shore resources and global project management tools, methods and standards. Headstrong maintains operations in seven countries, including offshore centers in India and Manila, with more than 3,700 employees globally.
Genpact is a global leader in business process and technology management, offering a broad portfolio of enterprise and industry-specific services. The company manages over 3,000 processes for more than 400 clients worldwide. Putting process in the forefront,Genpact couples its deep process knowledge and insights with focused IT capabilities, targeted analytics and pragmatic reengineering to deliver comprehensive solutions for clients. Lean and Six Sigma are an integral part of Genpact�s culture and ,Genpact views the management of business processes as a science. Genpact has developed Smart Enterprise Processes (SEPSM), a groundbreaking, rigorously scientific methodology for managing business processes, which focuses on optimizing process effectiveness in addition to efficiency to deliver superior business outcomes. Services are seamlessly delivered from a global network of centers to meet a client�s business objectives, cultural and language needs and cost reduction goals. Learn more at www.genpact.com.
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