Genpact Files For IPO: Dependence On GE Aside, Worth Watching

Genpact, India’s largest Business Process Outsourcing company, plans to raise $600 million in an IPO on the NYSE, trading with the symbol 'G'. The IPO will be managed by Morgan Stanley, Citigroup Inc. and JPMorgan Chase.

Here’s a little about the company via their Prospectus:

We manage business processes for companies around the world. We combine our process expertise, information technology expertise and analytical capabilities, together with operational insight derived from our experience in diverse industries, to provide a wide range of services using our global delivery platform. Our goal is to help our clients improve the ways in which they do business by continuously improving their business processes, including through the application of Six Sigma and Lean principles and by leveraging technology. We strive to be a seamless extension of our clients’ operations.

We have a unique heritage. We built our business by meeting the demands of the leaders of the General Electric Company, or GE, to increase the productivity of their businesses. We began in 1997 as the India-based captive business process services operation for General Electric Capital Corporation, or GE Capital, GE’s financial services business. As the value of offshore outsourcing was demonstrated to the management of GE, it became a widespread practice at GE and our business grew in size and scope. We took on a wide range of complex and critical processes and we became a significant provider to many of GE’s businesses, including Consumer Finance (now GE Money), Commercial Finance, Insurance, Healthcare, Industrial, NBC Universal and GE’s corporate offices.

Our leadership team, our methods and our culture have been deeply influenced by our eight years as a captive operation of GE. Many elements of GE’s success—the rigorous use of metrics and analytics, the relentless focus on improvement, a strong emphasis on the client and innovative human resources practices—are the foundations of our business.

Numbers:

• 2006 Revenues: $613.0
• Net Income: $39.8
• About 74% of revenues came from General Electric (GE)

According the Business-Standard, General Atlantic and Oak Hill Capital Partners hold 60 per cent of the company’s equity, while GE owns the remaining 40 per cent. All the three shareholders are diluting their stake through the proposed IPO, according to the SEC filing.

Genpact employs a little over 28,000 people across its centers in India, China, Hungary, Romania, the Philippines, Mexico and the US. The company is also hiring excess of 800 new employees a month in India.

Although, I don’t like such a high dependence on GE, sales to customers other than GE almost quadrupled in 2006.

Definitely worth keeping an eye on.