Singapore’s Temasek Holdings Pte. Ltd has signed an agreement to buy 17-18% in Blackstone Inc.-backed VFS Global Services Pvt. Ltd for $950 million, three people aware of the matter said.
The deal values the visa outsourcing and technology services company at $5 billion in equity value and $7 billion in enterprise value, the people said on the condition of anonymity.
“The deal has been signed. An announcement is likely soon,” the first of the three people said.
Bloomberg had reported on the Singaporean state-owned investor’s interest in VFS Global in September.
In 2021, the US-based alternative asset manager Blackstone acquired a 75% stake in VFS Global from Swedish private equity company EQT AB for $1.8 billion.
“The idea for Blackstone is to de-risk the investment and take some money off the table, and as for Temasek, it gives them a play in a well-managed profitable company,” the person cited above added.
After many options
The deal comes after Blackstone explored various options to monetize its stake in VFS Global, ranging from a 51% stake sale to an initial public offering.
“VFS will eventually list,” the second person said, adding an initial pubic offering is still two to three years away.
Spokespersons for Blackstone and Temasek declined to comment.
VFS Global, headquartered in Zurich and Dubai, offers administrative solutions for governments to process passport applications and visa consular services.
Founded in 2001 by Zubin Karkaria, who serves as the chief executive, VFS has processed over 294 million applications and approximately 141 million biometric enrollments since 2007.
The company has a significant presence in India, providing visa application services for the US consulate in various Indian cities.
Tailwinds for revenue
According to CareEdge Ratings’ January 2024 release, rising demand for outbound tourism, backed by strong post-pandemic recovery in travel, growing Indian economy, rising incomes and spending on leisure travel, is expected to support the company’s revenue growth in the coming years.
Also, with the onboarding of a new client, Saudi Arabia, the company’s application processing is expected to increase further.
“The company’s revenue had dwindled in 2020-21 due to covid-19-led travel restrictions; however, the company’s performance rebounded from 2021-22 onwards. Given the established market position of the company in visa processing services and an increase in the application processing volume, the company was able to book significant revenue growth of 65% in 2022-23 with total income from operations at ₹712.38 crore (2021-22: ₹431.97 crore),” the release said.
VFS Global’s total income from operations stood at ₹634.74 crore during the first half of 2023-24. Its operating margin stood at 33.01% in the period, compared to 32.65% in the year-ago period, the release added.
