On June 8^th, Italian BPS provider Comdata announced the acquisition of the French group Izium, which includes the CMS provider B2S, for ~€200m. The acquisition will be the first entry for Comdata in France and will lift the company to a top 5 CMS provider in Europe with estimated proforma revenues of ~€750m for 2017.

Entry into a mature and healthy French CX market

Under the deal, Comdata will acquire 100% of the Izium group’s subsidiaries:

• Contact center service provider B2S, offering customer care, technical support, sales, and collections to the French market from 10 onshore and offshore locations in Morocco and Madagascar
• Colorado Consulting, a CRM consulting firm supporting the French domestic market and French multinationals abroad with a strong luxury brands portfolio
• BCust, a call center technology and CRM system integrator
• CMS, a B2B debt collections business.

Together the four firms have ~6k employees, 150 clients, and 2016 revenues of ~€180m. Maxime Didier, founder and majority shareholder of Izium, will reinvest in Comdata Group, becoming the second largest shareholder (11%) after PE Carlyle Group (~80%).

The French market is attractive for Comdata as the third largest in Europe (NelsonHall est. $3.1bn for 2017) with an established mix of onshore and offshore delivery. It also has better average margins compared to Italy and Spain and interesting sales opportunities for first-time outsourcers and even in mature segments such as telecoms and media.

Prospects in provisioning and middle office support

Comdata also looks to utilize sales opportunities to expand the customer facing services of B2S with its own experience in back office management for customer service. It offers order management, claims processing, service provisioning, field support, middle office, B2C collections, and document management for telecom and energy clients in Italy. Comdata has been supplying these services to several of the clients since the early 2000s.

In other sectors, such as banking, Comdata operates as the de facto front and back office, offering document processing, digitalization, and account management. For example, for an Italian online bank, Comdata delivers post-sales support, account and claims management, and collections. As part of this service integration, Comdata has reengineered support processes and applied automation to achieve efficiencies.

This approach for an incremental increase of the share of wallet also relies on the B2S client base in new verticals (automotive, retail, and travel) and on cross-selling in geographies for telecoms, BFSI, energy, and utility multinational clients.

Fast track to the top 5

Following the investment by Carlyle Group in 2015, the Milan-based Comdata embarked on an active M&A path combining in-market consolidations to diversify its sector exposure and win market share and add capacity, with the goal of entering the largest European markets:

• In 2016, it acquired the Spanish CMS provider Digitex, which added ~16k employees in Spain, Colombia, Mexico, Peru, Chile, Guatemala, and El Salvador
• Later in 2016, it bought the Turkish CMS vendor Win Bilgi Iletisim, with ~3k staff in Istanbul and Eskişehir
• In 2017, it expanded its Spanish footprint with the ~600 staff call center Overtop Projects

Comdata growth plans

Comdata expects to close its French acquisition by August, start the integration process, and eventually rebrand all its acquisitions to a single brand.

Comdata sees increased client requirements for scale of operations in both onshore and offshore, vendor consolidation, and pan-European support. That is why it aims to become a top 3 vendor in each of the markets it operates and plans to grow through organic and active M&A in Continental and Northern Europe.