Deal focus: Everstone secures 3x return on outsourcing play

The US-Asia corridor is a key strategic area for Everstone Group. The India and Southeast Asia-focused private equity firm expects to deploy around half of its capital in healthcare and technology services plays that combine US dollar revenues generated from US-based customers and labor pools in India and the Philippines working under emerging markets currency cost structures.

“Everise is one of the early investments in this thematic that we have followed right through,” says Avnish Mehra, a senior managing director Everstone, of the recently announced sale of the business process outsourcing (BPO) company to Brookfield Asset Management. Mehra declined to comment on the size of the deal, but a source close to the situation put it at $450 million, with Everstone set to deliver a 3x return on its investment.

Everise was the product of a collaboration with Sudhir Agarwal of Singapore-based Sunrise BPO, which began in 2016. Everstone was looking for ways to target the US healthcare industry, while Agarwal wanted to build a next-generation outsourcing operation that took customer service to the next level. They spent a year looking for a suitable asset, before settling on private equity-owned C3.

“It was a plain vanilla call center business serving the US healthcare market,” says Mehra. “Today, customers want to contact you via chatbots, WhatsApp, and online channels, but the company didn’t have that. To address these needs, you need menu of propositions which Everise now delivers including onshore, near shore and offshore delivery, work from home, and artificial intelligence for content moderation.”

Revenue now stands at nearly $300 million but it initially fell from $170 million to $140 million as Everstone and Agarwal’s team rebuilt the business. This involved ending contracts where the terms weren’t right or the margins were poor. Meanwhile, the product offering was augmented by three further acquisitions.

Everise bought US product support specialist Trusource Labs and Malaysia-based chatbot developer Hyerlab, and formed Ubase, a joint venture with Korea’s Globee that provides services in Asian languages, notably Japanese. Asia is a fast-growing part of the business but Everise continues to generate 90% of its revenue from the US, with 65% coming from healthcare companies and 15-20% from technology players like Uber, Google, Apple, DoorDash, and Instacart.

“We also did a lot of technology partnerships that really helped build out work-at-home solutions,” Mehra says. “Before COVID-19, about 15% of our agents were working from home. We went to 95% in the space of two-and-a-half weeks. The agents love this arrangement, especially women, and we are over 50% women. However, it’s not easy to provide this flexibility given the security and operational overview features you need.”

Everise went from negative growth in 2017 to high single-digit growth in 2018 and 20-25% in 2019 and 2020. A sale process was put on hold because of COVID-19 but reactivated in September. “People knew the asset and they had seen it in its previous incarnation as C3,” Mehra adds. “Some of the strategics couldn’t believe the transformation, going from negative to about 15% EBITDA margin, with EBITDA doubling almost every year in the last two to three years."

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• Topics
• South Asia
• Southeast Asia
• Trade sale
• Buyouts
• Support services
• India
• Everstone Capital
• Brookfield Asset Management
• professional services