Friday, September 10, 2010

Kale Accelya Deal Analysis

Kale Accelya Deal Analysis

Accelya is niche BPO player based in Europe. From Accelya's perspective the deal has the following positives.

1. It gives them entry into IT services with a player that knows the airlines space well, allowing them to further penetrate their clients through cross selling
2. They can now offer integrated BPO/IT Services and a stronger value proposition for new customers
3. Gives them scale- The combined entity would be the largest IT/ITES services provider for airline industry
4. Most importantly, it gives them local knowledge and strong base for offering offshore BPO services from India helping them lower their operating costs

While being listed gives them some additional credibility it is not a huge advantage. Although listing costs are not very high in India

Kale's promoters

1. Decent premium price over current price and a large premium over the undisturbed price
2. Continuing employment for Vipul Jain - the current CEO and co promoter(who got 2 cr salary last year and possibly a sweeter/upgraded deal going forward)
3. Promoters get to keep the logistics division and possibly an opportunity to build another logistics focused IT services company. (the slump sale just before the deal also allowed to plug the valuation gap for both parties; as per the company the logistics division had ~4 cr revenue and about ~6 cr loss;This is theory means higher profits for accelya, which wants to remain only in airline space and a positive option value for the promoters )

They could have possibly got higher valuation, but the softer benefits in this deal may have trumped other potential offers

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