Genpact appears to have outpaced Capgemini which was also in advanced talks to buy a controlling stake in Headstrong for $500 million, according to Economic Times.
The deal is funded through a combination of existing cash and acquisition financing, and will close on May 31, 2011. The company expects the deal to add to its earnings per share on a GAAP basis in 2011. Genpact currently manages over 3,000 processes globally and offers analytics and re-engineering to IT solutions for 400 clients worldwide.
In 2010, Headstrong registered revenues of $217 million. Within the capital markets, Headstrong has domain expertise in asset management, derivatives, wealth management, prime brokerage, reference data, compliance and mortgages. In addition, it has recently launched a practice in healthcare administration. The company employs 3,700 people in seven countries and has three centres in Noida, Bangalore and Manila.
"Headstrong is a complementary business. With this acquisition, we are gaining critical domain and technology expertise in the complex but highly attractive capital markets industry vertical. This expertise will be combined with our capabilities in business process management (BPM) and Smart Decision Services that encompass analytics and re-engineering," said Pramod Bhasin, president and CEO of Genpact.
"The acquisition of Headstrong will also help us expand operations in the US," said Tiger Tyagarajan, COO of Genpact. The company expects Headstrong's long-term growth rate to be in excess of 20% per year.
Headstrong offers consulting and IT services but has a specialised focus on capital markets and healthcare segments. With this deal, Genpact will now target these markets with its governance, risk, compliance and back-office processing services. Sandeep Sahai, CEO of Headstrong, has been placed at the helm of Genpact's capital markets industry vertical.
"Our companies' combined offerings create a compelling value proposition, with potential to offer Genpact's expertise in BPM, re-engineering, high-end analytics and infrastructure support to our clients," said Sahai. "We will also add our capabilities to Genpact's client portfolio in the banking, financial services and insurance markets. Our geographical footprint will increase as well, allowing us to provide these services in the USA, Mexico, Poland, Hungary and China."
In February, 2010, Genpact acquired Symphony Marketing Solutions, Inc., which provides analytics and data management services to the retail, pharmaceutical and consumer packaged goods industries. Soon after, Genpact Mortgage Services made an equity investment in High Performance Partners, LLC (HPP), a technology solutions developer for the mortgage industry.
Financial advisors for the deal included Citigroup Global Markets Inc. and UBS Securities LLC while Cravath, Swaine & Moore LLP acted as outside legal counsels for Genpact. Headstrong employed Morgan Stanley & Co. Incorporated as its exclusive financial advisor while Kirkland & Ellis LLP acted as its legal counsel.
Shares of Genpact closed 1.72% up at $14.76 on Tuesday on the New York Stock Exchange.