Founded in India, VFS Global is a spinoff of Swiss travel group Kuoni. It’s 90% owned by Swedish private equity firm EQT and 10% by the Kuoni Foundation, Hugentobler Foundation and founder CEO Zubin Karkaria.
iStockThe world’s largest alternative asset manager has also been buying into undervalued travel-related businesses the world over that have been disrupted by the pandemic, making a longer-term bet on the space.
Blackstone is in advanced discussions to acquire VFS Global, the world’s largest visa outsourcing company, for $1-1.2 billion as travel restrictions gradually ease with more people getting vaccinated against Covid-19, said people with knowledge of the matter.
Founded in India, VFS Global is a spinoff of Swiss travel group Kuoni. It’s 90% owned by Swedish private equity firm EQT and 10% by the Kuoni Foundation, Hugentobler Foundation and founder CEO Zubin Karkaria. The private equity firm bought Kuoni in 2016 with a view to breaking the company up. After selling off former Kuoni businesses GTA, to Cinven-owned Hotelbeds, and Global Travel Services, to JTB Corporation, EQT strengthened VFS with a series of bolt-on acquisitions. In 2018, the Kuoni Group merged into VFS Global, making its India-born business the mainstay of the group.
The due diligence exercise for the visa-processing firm is complete.
The legal documentation is expected to start in the coming weeks.
Once completed, this will be Blackstone’s second investment in IT services this year in India after doubling down on Mphasis and reinvesting in it. The world’s largest alternative asset manager has also been buying into undervalued travel-related businesses the world over that have been disrupted by the pandemic, making a longer-term bet on the space. In January, it acquired Bourne Leisure, which runs Butlin’s and Haven’s holiday parks in the UK. It followed up with a $6.2 billion offer for Australian casino operator Crown Resorts.
“They have taken a strategic call to back travel businesses that are growth oriented but are facing temporary dislocations on account of Covid,” said an analyst familiar with Blackstone’s strategy. “They are taking a five-eight year bet that a globally mobile population with high disposable income will need to travel, for business or leisure. Add to that tech and IT services have been one of their consistent growth pillars. This is a niche business with high entry barriers.”
Blackstone, EQT and VFS Global declined to comment. When asked about business picking up, a VFS spokesperson said, “With international borders opening gradually, we have observed a positive momentum in global mobility.”
EQT in early 2019 launched a formal sale process by appointing Lazard and, in parallel, that for an IPO. But the expected $2.5 billion valuation got impacted after business came to a halt due to the pandemic, leading to the move being scrapped. Subsequently, EQT sought bilateral negotiations.
VFS began with visa application services for the US embassy in India in 2001. Since then, it has grown into a global operation with more than 3,532 application centres in 143 countries across five continents.
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