Citigroup in talks to sell stake in Indian BPO unit
23 May 2007 | 4958 views | 0
Citigroup is holding talks with prospective bidders, including IBM, about selling a stategic stake in its business process outsourcing (BPO) business in India.
According to a report by the Mint paper, which cites people familiar with the matter, Mumbai-based Citigroup Global Services - which was formerly known as e-Serve International - could be valued at over $1 billion, based on estimated annual revenues of between $300 million and $400 million.
Both Citigroup and IBM have declined to comment on the development, but the bank has started negotiations with parties regarding a strategic stake sale, says the report.
Citi is thought to be exploring the possibility of structuring a deal along the lines of the one between IBM and Indian mobile operator Bharti Airtel. In March 2004, IBM took over Bharti's IT operations in return for assured revenues of up to $750 million over a 10-year period.
Another source has told the paper that a "Genpact-like deal" could be a possibility. BPO firm Genpact was spun off from General Electric in 2004. GE retained a 40% stake and sold the remaining part to equity companies Oak Hill Capital Partners and General Atlantic Partners.
Citigroup took over the Mumbai-based unit in 2004 by acquiring the 55.6% it didn't already own in the business.
This latest speculation follows last month's news that Citigroup is axing 17,000 jobs under a cost cutting and restructuring plan that includes the shifting of 9500 roles to lower cost locations and streamlining of in-house IT functions