Quess Corp has agreed to acquire minority stakes in two Bengaluru-based companies and a majority stake in a Singapore firm, as the business services provider part of Canada's Fairfax Group continues to follow its 'string of pearls' acquisition strategy for expansion.
The company said in separate statements it will buy a 49% stake in Terrier Security Services (India) Pvt. Ltd for Rs 72 crore ($10.8 million), a 45% share in Simpliance Technologies Pvt. Ltd for Rs 2.5 crore and a 64% holding in Comtel Solutions Pte. Ltd for S$27.52 million (about $20 million) in cash.
The three deals add to the 10 acquisitions that Quess Corp has struck in the last three years, but are the first since the company went public earlier this year after a blockbuster listing.
Quess founder and CEO Ajit Isaac had recently told VCCircle that the 'string of pearls' strategy had worked well for Quess Corp as such acquisitions are easier to integrate and grow.
The decade-old company has been growing through mergers and acquisitions, diversifying and creating a string of services. It completed its first acquisition in the second year of its operations and continued to gobble up peers almost every second year.
The M&A strategy has been driven by Isaac, who earlier sold PeopleOne Consulting to Swiss staffing giant Adecco in 2004. Quess itself was acquired by travel and tour company Thomas Cook, part of Canadian billionare Prem Watsa's Fairfax, in early 2013 for Rs 256 crore.
The purchase of a stake in Terrier marks Quess Corp's entry into the manned guarding and security solutions business.
Terrier was set up in 1989 by Capt. Ravi, who was with the Indian Army previously, and operates in 60 cities across 14 states. It has about 400 clients and has deployed more than 16,000 guards as of 31 August 2016. The company posted revenue of Rs 220 crore and net profit of Rs 5.9 crore for 2015-16.
Isaac said the deal with Terrier is a strategic fit as it helps the company expands the bouquet of services it can offer its clients.
Simpliance was set up only in April this year and is headed by former naval officer Anil D'Souza. It has developed a technology platform for compliance management related to labour laws. The deal with Simpliance provides Quess an entry into the technology-enabled solutions business.
Comtel marks Quess’ entry into the technology staffing domain in Singapore. Quess hopes the deal will provide a significant boost to its operations in Asia Pacific where it already has presence in Malaysia, the Philippines and Sri Lanka.
Quess said it will initially acquire 64% of Comtel and the balance in a phased manner from 2017-18 to 2019-20.
Comtel is one of Singapore’s largest independent staffing companies and also has operations in Malaysia and Indonesia. The company has more than 60 clients and 1,400 employees. It grew at a compounded annual rate of about 27% between 2013-14 and 2015-16 and closed FY16 with revenue of S$82 million.
Isaac said the acquisition of Comtel will serve as a springboard for expansion of other Quess services such as general staffing, managed services for technology, training and skill development, and facility management to Singapore. "In addition to being margin accretive, the investment is in line with Quess’ philosophy of backing strong management teams," he said.
The transactions are subject to certain conditions and regulatory approvals, and are likely to be completed by the end of December, Quess said.
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