Bangalore: Italy-based Gi Group, a leading staffing company, has bought out the 49% stake of its joint venture partner Elixir Consulting for an estimated Rs 75-100 crore.
The $2-billion staffing giant forayed into India in 2008 through a JV with mid-level search and recruitment process outsourcing firm Elixir Consulting. The global company had a 51% stake in the JV while the rest was owned by Vipul Prakash, managing director of the Noida-based firm. Entering a market with a joint venture and then going on to buying out the partner is a strategy Gi pursues in emerging countries.
"When we enter any new market, our strategy is to buy some stake in the company. After few years of business operations and evaluation of future potential, we decide to increase the stake or acquire it (the JV) completely. The current deal is a part of the same strategy," said Davide Riboni, country head (India), Gi Group.
Though Riboni refused to comment on the size of the transaction, a senior member at Elixir said it was anywhere between Rs 75 crore and Rs 100 crore. "The procedure is not yet complete but the deal has been signed," said a senior member at Elixir who did not wish to be named.
Prakash started Elixir in 2000 as a firm focused on mid-level hiring and recruitment process outsourcing (RPO). An RPO is a form of outsourcing when a client transfers all its hiring processes to an outside service provider. He started another company called EWS Search in 2009, which looked at executive search segment.
A change of management is now on the anvil with a new CEO expected to join Elixir; which has an interim CEO at present. Prakash will remain a board member, but will not be involved in running the show, said the senior executive at Elixir. Riboni said the group may "consider having a resource with local knowledge and strong domain and leadership skills".
Hiring industry bosses say this sale shows that merger and acquisition in this market will now gather speed. "This is a big deal in the hiring sector and shows that global companies are looking to expand on the domestic turf," said Aditya Narayan Mishra, GM, Randstad. He added that the Indian arms on an average contribute at least 10% to overall global volumes.
A few years ago, Randstad had bought Ma Foi while others like Manpower, who have ventured on their own, are reported to be on the prowl as well.
Adecco bought Ajinkya in fiscal year 2008 to enter blue collar staffing space and TeamLease acquired IIJT to penetrate further into vocational training segment. Investments have also poured in to make the transitions aggressive with companies like Randstad investing 1.4 million euros for a name change in India.
For Gi Group, there are more acquisitions on the cards as well.
"We will be looking at more acquisitions across the sectors in India to strengthen our presence. The acquisitions would carry the objectives of reinforcing our current business as well as building capabilities to provide our customers with other affiliated services," said Riboni.
The temporary staffing business in India is estimated to be worth Rs 3,000 crore, the permanent staffing business is at nearly Rs 17,200 crore and the search market is around Rs 700 crore, according to a report by E&Y and Executive Recruiter's Association released in 2012.
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