Aegis Ltd., an outsourcing unit of Essar Group, may sell the first non-convertible dollar bonds from an Indian information technology company to fund expansion.

“It is still safest to have debt in dollars,” Aegis Chief Financial Officer C.M. Sharma said in an interview at the company’s office in Mumbai. “We have four loans in different currencies that we want to repay and keep some money to fund acquisitions. We would not want to dilute equity by issuing convertible bonds.”

The company, which bought PeopleSupport Inc. in 2008, may sell its bonds as part of a financing package that would include a loan of as much as $350 million to consolidate debt, he said.

India’s software services industry is recovering after customers cut spending amid the global economic crisis. Azim Premji, billionaire chairman of Wipro Ltd., India’s third- largest software exporter, said last month that he’s seeing “strong demand” after vendors cut prices and renegotiated contracts last year.

“India’s information technology and services companies typically are net cash positive and rarely need to issue debt,” said Hitesh Shah, an analyst at IDFC Securities Ltd. in Mumbai.

Essar Steel Holdings Ltd. in May postponed a sale of dollar bonds amid investor concern about contagion from Europe’s debt crisis. It later issued convertible bonds to its parent.

Aegis borrowed $116 million in 2008 to pay for its acquisition of PeopleSupport. The loan paid an all-in fee of 420 basis points more than the six-month London interbank offered rate, Sharma said.

Source:http://www.businessweek.com/news/2010-08-20/essar-s-aegis-plans-first-dollar-bonds-from-indian-i-t-company.html

The business process outsourcing (BPO) unit of Essar Group, Aegis Ltd, has acquired a majority stake in AGC Networks Ltd, the Bombay Stock Exchange (BSE)-listed Indian arm of US-based enterprise networking solutions firm Avaya Inc., for $44.5 million (Rs206.93 crore).

Aegis will buy Avaya’s 59.13% stake in AGC for Rs245 a share, a 12% discount to AGC’s Friday closing price of Rs278.45. This will be the 14th acquisition by Aegis and the second this fiscal year.

AGC, earlier known as Avaya Global Connect, helps large enterprises design and implement solutions for linking multiple campuses across different geographies. Such unified communication channels are an integral part of setting up offshore operations for cost-effective management of business processes, an area that Aegis specializes in.
The acquisition will help Aegis expand its services portfolio, Aegis chief executive officer Aparup Sengupta said on Sunday.

Besides the Indian arm of AGC, Aegis will also acquire the Australian and New Zealand operations of the firm. About 500 employees of AGC will become part of Aegis. For the six months ended 31 March, AGC had a revenue of Rs276.8 crore and a profit of Rs18.7 crore.

AGC shares touched a 52-week high of Rs310.30 in intraday trading on on 12 May, when they rose by the maximum permitted one-day increase of 20%. Trading volume on the day was 1,748,722 compared with its five-day average of 46,119.

Under the takeover guidelines of the Securities and Exchange Board of India (Sebi), the market regulator, Aegis will make an open offer for buying 20% more of AGC from shareholders. The acquisition will be done through Essar Services Holdings Ltd. Edelweiss Capital Ltd was the adviser for the transaction and will also be the manager of the open offer.

Although the acquisition is at a significant discount to the market price, Aegis’ Sengupta said the open offer price would be calculated based on Sebi guidelines and would be higher so that shareholders would have an incentive to sell. The company expects the open offer size to be in the range of Rs78 crore.

On 19 May, Aegis acquired the Texas-based customer service centre operation of US financial cervices firm Sallie Mae for an undisclosed sum. As part of that transaction, Aegis had also taken on board about 350 employees in Texas.

Aegis has around 40,000 employees at present and is among the largest Indian BPOs. While the privately held firm does not disclose its revenue, Sengupta said recently that he hopes to make Aeigs a $1 billion entity within the next 12-18 months.

Earlier this month, he told The Hindu Business Line newspaper that Aegis’ plans for an initial public offering had been put on hold for now.

Source:http://www.livemint.com/2010/05/30133902/Essar-Group-acquires-Avaya82.html