Hinduja Global Solutions to raise healthcare business, PE to raise funds
Hinduja Global Solutions (HGS), the business processing outsourcing (BPO) unit of the diversified business group Hinduja Group, is considering converting its healthcare business into a company. The group plans to divest its cash-rich healthcare unit and form a company in a review of the existing business. This review is part of a two-step value unlocking exercise of the company’s business unit. In fact, after achieving a record profit in the second quarter, the company is focusing on keeping the business going.
Possibility of increasing business size and becoming a cash cow
A knowledgeable source said, “HGS has plans to divest the healthcare business as it is expected to grow in size and become a cash cow, or generate revenue for a long time in the low growth market. The company plans to bring fresh private equity funds to this new business in the second phase. ”
The reason for the group’s decision is the value unlocking of important businesses.
The key reason for the group to take this decision is the value unlocking of an important business. It is estimated to earn between Rs 700 and 800 crore from the sale of a stake in the company. The second source said that the work of getting the deal has been given to investment bank Barclays. He said, “The company can get rerating when the right price is found.”
In September, the purpose of separating all business was told
In September this year, the company sent a message to the stock exchanges, in which it stated the purpose of separating all the businesses. It had said, “In view of the changing market dynamics and value unlocking opportunities across all divisions, the board of HGS has decided to review the company’s existing portfolio. The board and management of HGS understand the need to increase the profitability and value of all business divisions. So HGS sold India’s domestic business in January 2020.
Business review of HGS will change its business structure
A business review of HGS will change its business structure and merger and acquisition if needed or the business will be sold. HGS had a consolidated net profit of Rs 81.3 crore in the September quarter of 2020, which was 65.6% higher than the previous September quarter. The company’s stock has risen 21% in the last one month.
The company has insurance, technology, telecom, consumer, retail vertical
The healthcare business has a major share in the company’s total revenue. The company’s other businesses include insurance, technology, telecom, consumer and retail verticals. The company’s healthcare business grew 10.8% year-on-year to Rs 739.5 crore in the September quarter. During that time, the company’s revenue increased by 9.4% to Rs 1,332.6 crore.
The Healthcare category has always been a strong performer: CEO Sarkar
HGS CEO Partha De Sarkar said last month, “The healthcare category has always been a strong performer, with technology clients and the UK public sector also achieving business growth.” He had said that the company would benefit greatly by having affordable healthcare primary focus for Biden’s government in the US. HGS is exploring shopping opportunities for companies in the digital space. As of 30 September, 2020 HGS had 235 core BPM (Business Process Management) clients and 699 HRO (Human Resources Outsourcing / Payroll Processing) clients.
