Scandal-hit Serco has finally resold its private-sector business process outsourcing (BPO) division to the previous private equity owner Blackstone for £250m, equating to a loss of £165m.
The division consists of middle and back-office skills across customer contact, transaction and financial processing, as well as related consulting and tech services.
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Under the terms of the deal, Blackstone will cough £220m in cash and a £30m loan note, which accrues interest at seven per cent a year and is to be entirely paid by 2022.
Unsurprisingly, Serco CEO Rupert Soames – the grandson of Sir Winston Churchill and who did not preside during the original sale – chose not to highlight the multi-million pound losses the transaction represented, preferring instead to highlight company strategy.
“In March 2015, we set out a strategy to focus Serco on being a leading supplier of public services," he said. "A core part of that strategy was our decision to sell our private-sector BPO operations. This disposal will not only strengthen further our balance sheet but also enable us to focus on the group’s five core markets."
Embarrassingly, Serco splashed £385m on the private-sector BPO unit, Intelenet, in May 2011. The move was designed to reduce the company’s reliance on the UK and the public sector.
The company admitted, previously, that this jaunt had “failed”, as building a private-sector BPO unit using public-sector marketing resources proved challenging, and integration of acquisitions that also included The Listening Company was “not well done”.
During Serco’s ownership, private-sector BPO delivery centres grew from 34 – employing 32,000 staffers – to 67, housing 51,000 people. Fifty-three of these are based in India, staffed by 48,000 heads.
The business unit turned over £359m in fiscal 2014, up 4.7 per cent in the four years under Serco’s ownership.