Australia's Five V agrees Philippines outsourcing carve-out

Five V plans to realize the deal as an acquisition by business process outsourcing (BPO) player Probe Group. The private equity firm paid Sydney-listed marketing company Salmat about $41 million for a 100% stake in Probe in 2018. Salmat is also the seller of MicroSourcing.

Salmat confirmed the A$100 million deal size for MicroSourcing in a release. However, The Australian Financial Review has reported the transaction to be worth A$300 million, with Australian investor Quadrant Private Equity participating as a new shareholder in Probe.

“We have fielded a number of enquiries and had significant interest in the MicroSourcing operation for some time now,” said Rebecca Lowde, Salmat’s CEO. “MicroSourcing has been a strong performer for Salmat since we acquired the first 50% of the business in December 2013, achieving revenue and earnings growth year on year.”

MicroSourcing describes itself as an offshoring and outsourcing services provider that helps foreign companies set up operations in the Philippines. This includes support in establishing and managing remote human resources and IT divisions. The company emphasizes that it does not provide traditional BPO services, which it sees as an expensive expansion method where quality control is difficult.

MicroSourcing is headquartered in Manila and maintains an office in Sydney. It operates across seven “delivery center” locations in the Philippines, which offer a combined 21,100 square-meters of office space and various business amenities such as function rooms, cafes, and health clinics. Salmat added two facilities to the portfolio during the 2019 financial year, growing workplace capacity 5% to 4,057 seats.

Salmat’s “managed services” revenue, which is derived from MicroSourcing, came to A$87.8 million in 2019, up from A$72.8 million the prior year. The company attributed the performance to its investments in new facilities during the year as well as efforts to target new clients online. This is said to have resulted in a reduction in margin for the second half of the year that is expected to improve in 2020.

The acquisition proposal coincides with the completion of a similar deal in 2018, when Five V agreed to carve out Salmat’s contact center unit for $53 million. That business spans Australasia and the Philippines, focusing on BPO, customer experience, speech technology, data visualization and social media services. The sale of MicroSourcing is expected to be completed by the end of February.

Australasia-focused Five V was established in 2013 by Adrian Mackenzie, formerly of CVC Capital Partners. Mackenzie’s fellow partners are Srdjan Dangubic, also a CVC alumnus, and Ravi Jeyaraj, who was a partner at Navis Capital Partners until 2018. Five V claims to have raised A$350 million for its third fund, bringing total assets under management to more than A$500 million.  

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• Topics
• Southeast Asia
• Buyouts
• Support services
• Philippines
• professional services
• Five V Capital