Ayala unloads stake in BPO unit to Convergys

MANILA, Philippines - Ayala Corp. (AC) is unloading its minority stake in business process outsourcing (BPO) unit Stream Global Services Inc. to global customer management giant Convergys Corp. in an $820-million (P36-billion) deal.

The transaction will create the world’s second largest customer management services provider, the conglomerate said in a disclosure to the Philippine Stock Exchange.

Under the agreement, AC’s BPO investment arm LiveIt and private equity partners Ares Management and Providence Equity Partners will sell all their shares in Stream for an enterprise value of $820 million.

LiveIt expects to realize around $145 million in total net equity proceeds as it unloads its 29-percent ownership in Stream, which focuses on customer relationship management including technical support, customer care and sales for Fortune 1,000 companies.

“The transaction is expected to close in the first quarter of 2014, subject to satisfaction of customary closing conditions, including receipt of applicable regulatory approvals,” AC said.

The conglomerate expects to book a net gain of roughly P2 billion ($46 million) through LiveIt.

LiveIt CEO Fred Ayala said the deal has strong strategic rationale given prospects in the information technology (IT)-BPO sector.

“We believe that the global IT-BPO industry will continue to expand, particularly in the Philippines, where we expect it to remain one of the country’s top generators of new jobs,” he said.

“Consequently, we are continuing to build our investee companies in the high growth segments of the industry, and starting to invest in the education space, which we see as a critical enabler of the IT-BPO industry given its ever increasing demand for well-trained Filipino talent,” Ayala added.

Following the transaction, Convergys expects to generate $3 billion in combined revenues and employ 125,000 (including more than 53,000 in the Philippines) serving clients in 35 languages from over 135 contact centers in 25 countries. Convergys will also become the second largest customer management services provider in the world.

“This acquisition is an important step forward in our plan for strategic growth and value creation,” said Convergys president and CEO Andrea Ayers.