Serco seals £250m sale of offshore call centres

 

Nick Goodway
Thursday 17 September 2015 01:27
Comments

Rupert Soames has delivered on one of the first pledges he made when he became chief executive of Serco, the troubled services group, with the sale of its massive offshore outsourcing operations to the private equity firm Blackstone for £250m.

Mr Soames identified the business, which supplies back-office services such as customer loyalty programmes, marketing and data management to hundreds of multinational firms, as non-core in March this year. Serco bought the business from Blackstone in 2011, for about £400m.

The sale price was seen by analysts at Shore Capital as slightly higher than expected, while Liberum thought it slightly below par. Several private equity firms were reported to have pulled out in the early stages of the auction process.

Mr Soames said: “In March we set out our strategy to focus Serco on being a leading supplier of public services. A core part of that strategy was our decision to sell our private sector BPO [business process outsourcing] operations. This disposal will not only strengthen further our balance sheet but also enable us to focus on the group’s five core markets. Overall this gives us greater financial and operational flexibility.”

The business being sold employs 51,000 people in 67 different call centres, of which 48,000 staff and 53 centres are in India.

It is expected to generate revenues of £235m this year and would have contributed trading profits of some £23m. The sale was worth £9m more than the value of the business on Serco’s books.

Serco said that in its loss-making UK BPO operations it had made some progress in ending unprofitable contracts early, but the rest were still likely to make a loss of £11m this year.

“This is good news,” said Stephen Rawlinson, an analyst at the broker Whitman Howard. “It is doing the right things, in our view, and that will show in due course. Management has never said it will be swift or smooth as the business recovers.”

Serco said the deal was expected to be completed by the end of the year and would comprise £220m in cash and a £30m loan note.

The company’s shares rose 2.4p to 105.8p on the news.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in