Flatworld Acquisition Corp, a recently formed blank cheque company, has raised $22 million to buy or merge with businesses including those in India. The firm said, in a statement, that it is eyeing deals in the global business services sector or emerging Asian markets including China and India.
VCCircle reported in March that Flatworld Capital LLC, a New York and Hyderabad-based private equity investment firm, is planning to launch a special purpose acquisition company (SPAC) which will target mid-market offshoring firms. One of its partners, Raj K. Gupta, is based out of Hyderabad.
SPAC is a pooled investment vehicle that allows public stock market investors to invest in private equity type transactions, particularly leveraged buyouts. These are the shell or blank-check companies that have no operations but go public with the intention of merging with or acquiring a company.
Flatworld said, in its document, that it will look at business services firms like those in financial services and legal processing services, healthcare services, engineering and R&D, among others. "We are in the early stages of a paradigm shift, particularly for middle market companies generating revenues from $5 million to $500 million, as significant provisioning of business services moves to low-cost global delivery destinations such as India and China. Recently, large North American organizations have been increasingly pursuing productivity improvements as a means of creating more efficient operations by streamlining key administrative and processing functions to global locations providing low-cost labor resources. We believe middle market business services companies are particularly well positioned to benefit from the macro trends of globalization," said its filing.
Flatworld Acquisition Corp will also look at deals beyond the business services sector. It will acquire a majority stake which gives it over a 50.1% stake in its target companies.
Flatworld Capital represents family offices and pension funds in the US and invests up to $100 million in a year. FlatWorld Capital focuses investments in leverage buyouts, recapitalisations, restructurings, acquisitions and growth of middle market companies in the US and India.
Earlier this year, Flatworld completed the acquisition of DJS Processing LLC, a Florida-based provider of business processing services for mortgage and real estate industries. The acquisition was done through Flatworld Capital’s affiliate DAL Group, LLC. Flatworld Capital has eventually merged the firm with a British SPAC called Chardan 2008 China Acquisition Corp to get it listed in Nasdaq. Post this merger, the new entity is called DJSP Enterprises, Inc.
DJS Processing has operation in Manila, Philippines and is engaged in offshoring activities. The company has posted net profit of $45 million in the calendar year 2009. Flatworld Capital plans to expand its operation further in the Philippines.