New Delhi, Aug 9: Hinduja Group’s business process management entity Hinduja Global Solutions Ltd (HGS) will divest its healthcare services business to funds affiliated with Baring Private Equity Asia (BPEA), based on enterprise value of USD 1.2 billion.
HGS has also seen its net profit more than double to Rs 117 crore, while operating revenues grew 25.5 per cent to Rs 1,550.5 crore in the June 2021 quarter from the year-ago period.
“The transaction (with BPEA) based on enterprise value of USD 1,200 million, subject to closing adjustments, is expected to complete within 90 days, subject to shareholder and other regulatory approvals,” HGS said in a filing late Monday night.
Post completion of this transaction, HGS will transfer all client contracts, employees, and assets, including infrastructure related to the healthcare services business.
The healthcare services vertical has over 20,000 employees across four geographies – India, the Philippines, the US and Jamaica – and recorded revenues of approximately USD 400 million in FY2021, the filing said.
“HGS will focus on strengthening its Consumer Engagement Solutions (CES), HGS Digital and HRO/ Payroll businesses that support several top global brands across its nine verticals. Services to healthcare clients delivered by the HGS Digital and HRO/ Payroll businesses will continue to be part of HGS’ portfolio,” it added.
HGS’ Healthcare Services business covers the entire lifecycle of a payer organisation, including member acquisition, enrollment and billing, benefit set-up, claims adjudication, grievance and appeals, among other services.
“Our healthcare services business has steadily grown over the years. We reached a stage where we could recommend to promoter to divest stake in this business to unlock value for all HGS stakeholders. We will use the generated funds to strategically invest for the future growth of the organisation,” HGS Global CEO Partha DeSarkar said.
He added that the company sees a long-term value and benefit to HGS in doing so.
“HGS will continue to focus on aggressively expanding its CES and digital businesses in line with our goal to transform itself into a ‘digitally-enabled customer experience (CX) company,” he said.
Jimmy Mahtani, Managing Director of BPEA, said the organisation has been investing in the technology services sector for more than two decades.
“We are excited to now have the opportunity to partner with CEO Ramesh Gopalan and his team to help take HGS’ healthcare services business to the next level as a new independent company. This will be our seventh investment in the sector and third in healthcare technology services,” he added.
Previously, the company has invested in CitiusTech and AGS Healthcare.
Barclays Bank Plc acted as the sole financial advisor to HGS on the transaction.
In a separate filing, HGS said its net profit has more than doubled to Rs 117 crore in the June 2021 quarter from Rs 49.22 crore in the April-June 2020 period.
The company’s operating revenues grew 25.5 per cent to Rs 1,550.5 crore in the quarter under review from Rs 1,235.8 crore in the June 2020 quarter, it added.
DeSarkar said building on the momentum from last year, HGS has begun FY2022 on a strong note.
“Our performance in the first quarter was better than expected, with double-digit YoY growth in revenue, EBIDTA and PAT,” he added.
The results were boosted by robust volumes in the Healthcare and UK businesses, and a resilient Work@Home-led delivery model, he noted.
“Despite the ongoing pandemic-related challenges, the overall business environment has improved, and we are seeing strong demand for our services. We continue to win major deals across verticals, especially in Healthcare, consumer and public sector,” DeSarkar said.
HGS’ digital solutions are also opening up new market segments and opportunities for the company as clients embark on customer experience transformation to cater to digital natives, he added.
“Looking ahead, we are investing in driving aggressive growth for the rest of the year. While we expect a robust open enrollment season in the healthcare vertical, we are also setting up new centres and looking to hire significantly to support new client wins in the UK and Jamaica,” DeSarkar said.
HGS’ capital expenditure for the quarter was Rs 44.8 crore, while it registered a reduction in gross debt of Rs 14.5 crore in the first quarter of FY2022.
As on June 30, 2021, its net cash stood at Rs 420 crore.
The company has announced an interim dividend of Rs 7 per share.
HGS added two new logos across verticals for core BPM services and nine for HRO/ payroll processing, and signed nine engagements with new and existing clients for HGS digital services (RPA, digital, analytics and social care services).
As of June 30, 2021, HGS had 252 core BPM clients and 717 HRO/payroll processing clients.
Its employee headcount stood at 42,769 at the end of June 2021 quarter, an increase of 2,880 from the March 2021 quarter.
HGS had 55 global delivery centres across seven countries at the end of the reported quarter, the filing said. (PTI)
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