Ayala’s BPO holding firm acquires US-based Affinity Express for $28M

LiveIT Solutions Inc., the holding company for Ayala Corp.’s investments in the business process outsourcing (BPO) sector, has acquired Illinois-based Affinity Express Inc., a leading provider of outsourced graphics and design services in several industries, for $28 million (P1.4 billion).

In a press briefing yesterday, LiveIT Solutions chief executive officer Alfred Ayala said Affinity is the company’s third acquisition, bringing its total cumulative investment in the sector to about $62 million (P3.1 billion) since June last year.

Ayala said the purchase was made through the acquisition of stakes in Affinity by US-based investment funds Flagship Ventures, Hercules Technology Growth Capital Inc., Ticonderoga Capital and Coop Securities LLC, and the infusion of $7 million in fresh capital.

The fresh capital will be used to partly fund Affinity’s planned construction of a production center in the Philippines in the second quarter of the year. This would be Affinity’s second production center next to the one in Pune, India.

Ayala said Affinity is targeting to install 200 to 300 seats by the end of the year. He said the group is now in the process of selecting the location for the proposed production center which could either be in Makati, Ortigas or Libis.

Funding for the purchase will come from LiveIT’s sister company AC Capital’s resources, Ayala said.

With over 3,000 customers around the world, Affinity provides graphics and design services to several industries, including the newspaper, direct mailing and quick printing industries.

"We are very pleased to be investing in an industry leading innovator like Affinity and are delighted that the entire management team which led the company to over 40-percent revenue growth last year, will remain with the company. With our investment, we believe that the company now has the optimal combination of people, expertise, market traction and capital that will enable it to continue to set the pace for the global outsourced graphics and design services industry," said Ayala.

For his part, Affinity chief executive officer James R. Daleen said the new funding from LiveIT will be used to beef up operations, accelerate technology deployment and support its international expansion.

LiveIT has earmarked about $100 million for its planned acquisitions in the next five years to capitalize on the growing BPO business. The company is looking to invest in companies that provide complex non-voice outsourced services in areas such as finance, insurance, healthcare and commercial graphics industries

It plans to focus on BPO companies in the US, Philippines and India that already have well-developed customer relationships in the international markets and the potential to leverage the Philippines’ large pool of skilled professionals.

"We are pleased that we are continuing to make progress towards our goal of investing in the high growth offshore IT and BPO sectors. Globally, these sectors are estimated to have generated $30 billion in revenues in 2005, which is projected to nearly quadruple to $110 billion by 2010," Ayala Corp. chief executive officer Jaime Augusto Zobel de Ayala said.

Apart from its investments in LiveIT, Ayala Corp. has also significantly increased its participation in the BPO sector through property and telecoms units Ayala Land Inc. and Globe Telecom, respectively.

Zobel noted that ALI has developed several of the country’s first office buildings for leading BPO firms like Convergys, PeopleSupport and Infonxx. The company is currently constructing a build-to-suit facility for HSBC at the Bonifacio Global City and the UP North Science & Technology Park. Both projects are expected to provide close to 160,000 square meters of leasable office space with a total project value of over P2.6 billion.

ALI is also developing 20 hectares in Canlubang, Laguna for a BPO park and a 47,000 square meter BPO complex in Makati in partnership with Goldman Sachs and Capmark.

Zobel said Globe has also become on the largest supplier of voice and data connectivity services to BPO companies in the country, pointing out that the BPO sector is now one of the largest revenue contributors in Globe’s Enterprise Business Group.

LiveIT’s first investment is a significant shareholding in eTelecare, one of the leading customer care companies in Asia. Next was the acquisition of Integreon , one of the leading providers of high-value, complex BPO solutions in the knowledge, legal, and document process outsourcing areas to clients in the US and Europe.