Investors plan to sell LPO firm UnitedLex for $200m

MUMBAI: Financial investors have moved the market for a potential sale of Gurgaon-based legal process outsourcing (LPO) firm UnitedLex Corp for $200 million. Venture capital firms Canaan Partners, Helion Venture Partners and Sequoia Capital have mandated Credit Suisse to look for a buyer for the company with a hybrid offshoring model, people familiar with the matter said.

UnitedLex provides technology-backed litigation, contract management, intellectual property and advisory services to its clients spread across North America, Europe and Asia. With over 1,500 attorneys, engineers and consultants with dual headquarters in Overland Park, Kansas and in Gurgaon, where most of its employees are based.

Investment bankers have approached strategic buyers like Nasdaq-listed Huron Consulting, Moody’s-owned Copal Partners and private equity buyout funds with the sale offer, sources mentioned earlier said. The financials of UnitedLex could not be ascertained independently, but a source said it had annualized gross billings of $90 million and a 20% operating profit.

UnitedLex could attract between $175-200 million valuation , at 8 to 10 times the operating margin, the source, who is familiar with the sale process, added. Pavan Vaish, global COO of UnitedLex, said over email that the news was inaccurate. “Given where we are in terms of delivered performance and the fact that we continue to see significant business growth in the coming year,” he said. Emails to Alok Mittal of Canaan Partners and Helion’s Rahul Chandra , both of whom are on the company’s board, did not elicit aresponse.

The LPO market continues to grow rapidly as corporate law departments and law firms face pressure to drive down costs. India is perceived as one of the best LPO destinations on account of the low cost of legal professionals (almost 50-60 % more cost competitive to the US and UK), time zone advantages and language proficiency.

The North American market has contributed hugely to the rise of the Indian LPO players making up more than 60% of their businesses. VC firms Canaan and Helion were early backers of UnitedLex founder Ajay Agarwal. Sequoia Capital joined the list of investors three years ago and the three investors bought out Agarwal’s stake, giving them a major interest in the company.