Temasek Holdings Pte. of Singapore. Ltd has signed a deal to buy 17% to 18% of Blackstone Inc. Ltd-backed VFS Global Services Pvt. Ltd. for $950 million, three people familiar with 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 condition of anonymity.
“The agreement has been signed. “There will probably be an announcement soon,” said the first of the three people.
Bloomberg had already reported in September on the interest of the Singapore state investor in VFS Global.
In 2021, US-based alternative asset manager Blackstone acquired a 75% stake in VFS Global from Swedish private equity firm EQT AB for $1.8 billion.
“The idea for Blackstone is to reduce the risk of the investment and take some money off the table, and as for Temasek, this gives them an opportunity in a profitable and well-managed company,” added the person cited above.
After many options
The deal comes after Blackstone explored several options to monetize its stake in VFS Global, ranging from a sale of 51% of its stake to an initial public offering.
“VFS will eventually go public,” the second person said, adding that an initial public offering is still two or three years away.
Spokespeople for Blackstone and Temasek declined to comment.
VFS Global, based 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 CEO, VFS has processed more than 294 million applications and approximately 141 million biometric enrollments since 2007.
The company has a significant presence in India and provides visa application services for the US consulate in various cities in India.
Tailwinds for revenue
According to CareEdge Ratings’ January 2024 release, growing demand for outbound tourism, supported by a strong post-pandemic travel recovery, growing Indian economy, rising incomes and leisure travel spending, is expected to support the company’s revenue growth in the coming years.
Additionally, with the addition of a new customer, Saudi Arabia, the company’s application processing is expected to increase further.
“The company’s revenue had declined in 2020-21 due to Covid-19 travel restrictions; However, the company’s performance recovered from 2021-22. Given the company’s established market position in visa processing services and an increase in application processing volume, the company was able to record significant revenue growth of 65% in 2022-23 with total revenue from operations of $712.38 crore (2021-22: $431.97 crore),” the statement said.
Total revenue from VFS Global operations stood at $634.74 crore during the first half of 2023-24. Its operating margin reached 33.01% in the period, compared to 32.65% in the same period last year, the statement added.
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