Xchanging Prepares IPO

London-based Xchanging announced plans for an initial public offering, and the listing of its shares on the London Stock Exchange. The offer is limited to the UK and selected European countries; no listing will be made in the U.S. or in other countries outside of Europe.

The Company, which is a pioneer for business process outsourcing (BPO), has “more than 3,800 employees operating in seven countries and services blue-chip customers in 34 countries, with a focus on the UK and Continental Europe,” said the announcement.

Chief Executive David Andrews, former managing partner for Western Europe and a board member of Andersen Consulting, founded Xchanging in 1999. It was one of the early pioneers in the formation of outsourcing for business data processing.

In 2000 it signed an agreement with Lloyd’s and the International Underwriting Association (IUA) as a partner in a joint venture to develop and operate a unified premium processing and claims service covering the London market (See IJ web site Nov. 27, 2000).

In addition to Lloyd’s and the IUA, its clients now include AON Limited, BAE Systems, Boots The Chemists, Citibank, Deutsche Bank, National Australia Group, Sal. Oppenheim, United Biscuits and University Hospital Birmingham.

General Atlantic Partners LLC, one of the world’s largest venture capital firms, with $10 billion under management, put up half of Xchanging’s initial capitalization. It remains the majority shareholder. AIG is one of the largest investors in General Atlantic.

Xchanging said it “recorded revenues of £393.5 million [$773 million] for the year ended 31 December 2006 an increase from £350 million [$687.7 million] in 2005 and £254 million [$799 million] in 2004 (a 2004-2006 CAGR of 24 percent). Xchanging generated profits attributable to shareholders (pre exceptionals and other non-trading items) of £17.1 million [$33.6 million] in 2006.”

The Company summarized its IPO as follows:
— Xchanging plc, a specially formed company, will become the parent company of the Group on Admission.
— The Global Offer is expected to be completed in late April 2007.
— Primary proceeds will be used to fund the continuing growth of the business.
— It is expected that some existing shares will be sold by current shareholders, including General Atlantic, the private equity company, which currently owns 54 percent of the fully diluted share capital. General Atlantic is expected to retain a significant shareholding in Xchanging post-IPO.
— Citigroup has been appointed sole Sponsor of the Global Offer.
— Citigroup and UBS have been appointed Joint Global Co-ordinators and Joint Bookrunners of the Global Offer.
— Jefferies and Bridgewell have been appointed as co-lead managers of the Global Offer.

Andrews commented: “We are delighted to be announcing this next stage in the development of Xchanging. Since we founded this business in 1999, we have demonstrated sustained high growth and developed what we believe to be one of the leading international pure-play BPO companies. Being a public company will enable us to take even greater advantage of the exciting opportunities available to us as our markets continue to develop.”