Onex Corp. president and CEO Gerald Schwartz.Nathan Denette/The Canadian Press
After 17 years, Onex Corp. is getting out of the call centre business with the sale of its majority stake in Sitel Worldwide Corp.
The sale recalls Onex's early days not only because of the long time it held onto Sitel, but also since it will leave just one direct legacy investment in the company's holdings. That's the remaining stake in Celestica Inc., the electronics manufacturing services business it picked up from IBM back in 1996, took public, and sold the bulk of its position in before the tech bubble burst.
The Toronto-based private equity heavyweight sold its 86 per cent share of Sitel to French customer relationship management firm Groupe Acticall for an undisclosed amount. Onex said on Friday the proceeds would be about $55-million (U.S.), which includes an earn-out component, meaning some compensation to Onex depends on the Sitel's future results.
Both Sitel and Celestica pre-date by a few years Onex's formation of two investment platforms used to pursue acquisitions with co-investors: ONCAP funds invest in medium-sized businesses, and the flagship Onex Partners funds look for larger opportunities. Before those fund families existed, Onex had already made close to 150 acquisitions and gone public. But in the years since 1999, it has climbed from $4-billion to $21-billion in assets under management.
Unlike Celestica, Onex hasn't cut its stake in Nashville, Tenn.-based Sitel, growing the business from essentially one call centre in Toronto to a global network of more than 60,000 employees, with facilities in 21 countries. Sitel provides services such as tech support and customer retention as well as social media and interactive voice response.
The Sitel investment started with the creation of ClientLogic Corp. in 1998, after two other businesses – North Direct Response and Softbank Services Group – were merged. The idea was to jump on the trend of companies increasingly looking to outsource their customer support services.
It acquired many complementary businesses in the following years including Sitel Corp. for about $450-million including debt, which was combined with ClientLogic to form Sitel Worldwide in 2007.
The business has faced some considerable challenges since then, including trouble with debt levels after the recession hit and struggles to grow revenue in recent years. When Onex management was asked on a call with analysts last year whether it might be time to move along, managing director Seth Mersky said that while Onex was committed to Sitel, the company would look at any other opportunities that presented themselves.
Now Onex is officially moving on, and not only to new private equity investments. It is also expanding through Europe and looking for growth in its credit business through collateralized loan obligations, or CLOs. Onex manages $5.8-billion in its credit platform now, which it hopes to grow to $10-billion by the end of 2017.