CVC in largest-ever Philippines buyout - update

PLDT will retain a 20% interest in the business and SPi's key managers will remain in place. The  transaction is expected to close in March.

"The deal plays to CVC's strength in many ways, most notably our partnership approach in the region," Brian Hong, a senior managing director at CVC, told AVCJ. "We are investing in a company with robust track record, leading position in attractive and growing sectors of the BPO industry. We are doing it by collaborating with a prominent local partner and a strong management team."

An 80% stake in SPi was put up for sale last year as part of PLDT's efforts to divest non-core assets. It announced in a December that a deal was in the process of being finalized. PLDT Chairman Manuel V. Pangiliannan previously told local media that a sale to a private equity fund involved in international BPO operations would likely be completed in early 2013.

SPi is the largest home-grown diversified BPO service provider in the Philippines with domain expertise in customer interaction, healthcare and publishing. The company primarily serves US and Europe-based customers with close to 18,000 employees worldwide across major delivery locations in the Philippines, India, the US and Vietnam.

In 2011, SPi sold its medical transcription business to Acusis, a US-based provider of outsourced clinical documentation solutions

The company posted revenues of $170 million for the first nine months of 2012, up by 16% year-on-year, and had an EBITDA margin of over 20%. This in part reflects the strong growth in the Philippines' BPO services. The sector employed 610,000 people in 610,000, up from just 100,000 in 2004.

The country has overtaken India to become the call center capital of the world. The Business Process Association of the Philippines projects the market will grow to $25 billion by 2016 from $11 billion in 2011, more than doubling the sector's revenue in five years.

CVC's previous investment in the Philippines - the acquisition of a 15% stake in Rizal Commercial Banking Corp. for $115 million in 2011 - was the country's largest PE deal since before the global financial crisis. In 2007, Temasek Holdings and Nomura bought a 20% interest in PNOC Energy Development Corporation for $373 million.

The SPi transaction joins these two - plus International Finance Corporation's $150 million injection into Banco de Oro Unibank in 2010 - in a select group of Philippines PE deals that have crossed the $50 million threshold.

CVC's partnership approach is also reflected in the $1.7 billion takeover of KFC's franchise in Malaysia and a number of other Southeast Asian countries, for which it teamed up with Johor Corp and the Employee Provident Fund, and its buyout of Indonesia's Matahari Department Store alongside Lippo Group.

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• Topics
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• CVC Capital Partners
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