I’ve been planning to write about VanceInfo (NYSE: VIT) for a couple of weeks, now.  They’ve been in the news quite a bit lately.  The company recently announced that it had

“…acquired the operating subsidiaries of TP Corporation Limited (”TP”), a Hong Kong-headquartered provider of Customer Relationship Management (”CRM”) solutions and call center services.”

Apparently, they paid US$1.1M, along with some promised payments contingent on future performance.  That seems like a pretty good deal for a company that reportedly had revenues of US$3.9M for the first five months of 2009.

“Headquartered in Hong Kong, TP develops and markets customer care software products in China and Southeast Asia and provides call center outsourcing services in Hong Kong. With over 25,000 CRM software licenses installed, TP helps its clients in telecommunications, financial services and government sectors to automate customer operation, support and management.”

I’ve long believed that the China outsourcing market was ripe for consolidation.  Perhaps VanceInfo is finally starting to get more serious about being the big dog, especially when we consider the next announcement.  According to a recent AP story that I noticed on Forbes, the company plans to offer 5.4M shares at $11 per share in a follow-on offering.

VanceInfo’s IPO priced at US$8.50 in late 2007, but the stock traded below US$5.00 per share several times in 2008 as well as earlier this year, so US$11.00 seems like a pretty good price.

As with all such things, it pays to look a bit beneath the surface.  According to the report in Forbes:

“Of the shares to be sold, 300,000 of them will be sold by VanceInfo, and 5.1 million will be sold by selling shareholders.  In addition, the underwriters have been granted an option to buy up to an additional 814,435 shares over the next 30 days to cover possible over-allotments.”

Unfortunately, this suggests that the sale could add less than US$3.5M to the company’s coffers, while allowing existing shareholders — most likely early investors and executives — to take more than US$55M off the table.  Oh well, the US$3.3 more than covers the upfront cash required to close the TP deal.

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Technorati Tags:  China, VanceInfo, China Outsourcing