EXLService Holdings, the holding company of EXL Service, a N.Y.-based offshore BPO firm focused on the financial services and insurance sector with an India-based model will be the second such firm to list in the American stock market and the first on NASDAQ Mumbai, India-headquartered WNS listed on NYSE in July.
EXL Service’s issue size is pegged at $67.5 million, a little less than its earlier proposed size of $75 million. WNS had raised $224 million in its IPO.
It has taken EXL, which was the first offshore BPO firm to file for an IPO in the U.S.A., way back in December 2004, almost two years to list. Citigroup, Goldman Sachs, Merrill Lynch and Thomas Weisel Partners were listed as underwriters for the offering, in a filing made by the company on Oct.19 ’06.
EXL Service, headquartered in New York, and having facilities in Pune and Noida, India, recorded revenues of $74 million in 2005, against $60.5 million in 2004. The Proforma revenues of EXL (with the acquisition of an analytical-services firm, Inductis, having a similar offshore model in July, 2006) for the first six-months in 2006 stands at $60.4 million. It derives close to 85 % of its revenue from insurance and financial services segments.
It derives more than 60% of its revenues from its top three clients — Aviva, Dell (including Dell Financial Services) and American Express. Its other major clients include IndyMac Bank, Prudential Financial and Centrica.
EXL, like WNS and the biggest pure-play offshore BPO firm, Genpact, is majority-owned by private-equity firms — Oak Hill Partners and Financial Technology Ventures who hold 49.6% and 16.5% respectively. The ownership of these firms would come down to 38.6% and 12.9% respectively.
Apart from ownership pattern, EXL Service shares a few more similarities with the top two BPO firms. Like Genpact and WNS, EXL became independent from its then parent Conseco in November 2002 in a management buyout. EXL, however, had started as an independent firm, unlike Genpact and WNS which started as captives of GE and British Airways respectively. It was subsequently been acquired by Conseco. It again became independent when Conseco filed for Chapter 11. These three firms also account for the largest share of offshore BPO work in the insurance domain.
EXL intends to use the net proceeds from the offering to repurchase or redeem all of its issued and outstanding Series A Preferred Stocks; repay all of its outstanding senior promissory notes payable to certain stockholders; for working capital and general corporate purposes.
EXL Services is likely to trade on the NASDAQ under the symbol EXLS.
