Quess Corp acquires majority stake in Allsec Technologies; stock up ~2%

Allsec Technologies Limited is a global company with considerable expertise in providing business process solutions across various industry verticals.

Apr 18, 2019 04:04 IST India Infoline News Service

Quess Corp
Quess Corp announced that its subsidiary Conneqt Business Solutions Ltd. (Conneqt) has signed definitive agreements to acquire a majority stake in Allsec Technologies Limited (Allsec). The transaction involves Conneqt purchasing 35.35% from the promoters, 26% from First Carlyle Ventures Mauritius thereby acquiring a majority control of 61.35%. In accordance with SEBI Regulations, Conneqt will make an open offer to the public shareholders of Allsec to purchase up to 26% of shareholding. The transaction is conditional to the fulfillment of customary closing conditions and required statutory approvals.
 
Allsec Technologies Limited is a global company with considerable expertise in providing business process solutions across various industry verticals. The Company started operations in 2001 and is listed on the National Stock Exchange of India (NSE) and BSE Limited. The Company operates across two segments globally viz., (a) Human Resources Operation (HRO) covering HRMS, Statutory Compliances, Payroll Services, Time and Attendance management; (b) Customer Lifecycle Management (CLM) which encompasses lead generation, customer retention and relationship management comprising both voice and non-voice processes.

The key strategic rationale for the transaction are as follows:
  • Strengthen Non-Voice services exposure: Allsec’s CLM operations has an equal share of voice and non-voice revenue. Given that Conneqt has significant voice share, the combined entity will have a diversified revenue stream with increased contribution from high margin non- voice business
  • Diversification of Revenue Stream through an established HRO practice: Conneqt will get a strong established HRO practice with long tenured client contracts ensuring customer stickiness while providing recurring income stream with significant upside potential
  • International CLM exposure: The acquisition provides Conneqt with a sizeable international presence which would increase to ~20% from the existing ~5% while servicing reputed clients roster in the IT and Retail sector
  • Delivery centres in Philippines and US: The existing delivery centre in Philippines will help acquire more voice contracts from the US. Also, US operations and sales presence will help accelerate International revenue for Conneqt
  • Value Accretion: Acquired entity will be accretive in terms of EBITDA Margins of ~19%, EBITDA to OCF conversions of ~87% and ROCE of ~32% based on FY18 figures
Quess Corp Ltd is currently trading at Rs731 up by Rs10.95 or 1.52% from its previous closing of Rs720.05 on the BSE.
The scrip opened at Rs730.85 and has touched a high and low of Rs732.70 and Rs727.10 respectively. So far 8,841 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs10,518.84cr.

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