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January 30, 2006 Times News Network

VC fund to pick up stake in UDS

CHENNAI: Venture capital funds in India are not shying away from entering hitherto uncharted territories, provided there is a right investment opportunity and growth potential. New Vernon Bharat is pumping in $10m for a minority stake in Updater Services (UDS), India’s largest facility management company.

Consistently growing at about 40% to 50% per annum and expected to end this fiscal with a topline of Rs 65 crore, UDS today manages in excess of 35m sq ft of space, primarily in IT and manufacturing sectors. It manages almost all of Infosys facilities, besides Embassy Golf Links (EGL) in Bangalore, the Tidel Park in Chennai and the Hitec City in Hyderabad among others.

Besides facility management services, it also offers production support services to companies like Hyundai Motor India and French glass major, Saint Gobain. While UDS has a minor presence in Mumbai and Delhi, almost 80% of its revenues come from South India, largely from Bangalore, Chennai and Hyderabad.

It intends to utilise the capital now raised for acquiring other facility management companies in areas where it is not present. It will also bring under its acquisition radar those companies offering complementing services.

“We have chalked out an aggressive acquisition plan to have a pan-India presence. And we will not hesitate to raise additional capital, if needed, to achieve the same,” T Raghunandana, managing director, Updater Services told ET. Veda Corporate Advisors facilitated the deal.

While UDS has a target to achieve Rs 100 crore in revenues by end of ’06-’07, it wants to ramp up the topline and race towards the Rs 250-crore mark in three years. “This is better achieved through inorganic growth,” Mr Raghunandana said.UDS is promoting a chain of service apartments to cater to the booming economy.

It has already acquired land on Chennai’s IT Corridor for an 80-apartment property in the city.”While acquisition of facility management companies will happen in the Western and Northern regions, where UDS has a limited presence now, the company will also move forward aggressively to have a national presence,” he said. “With big IT players spreading across India, it is only natural that they would expect the service providers too to do the same,” he added.

“This will be followed by Bangalore and Hyderabad and will later spread to Kolkata and Kochi, besides the B-cities like Coimbatore and Pune,” he pointed out.Unlike the multinational facility management companies like JLL and JCI, who in turn outsource these services to smaller companies in India, UDS is an integrated player equipped with in-house resources that are self-managed. With over 8,500 employees on its roll, it has also been offering ‘staffing services’, which it now wants to extend to the hospitality sector.