Chennai: Continuing its strategy of acquisitive growth, Apollo Health Street Limited has bought Zavata Inc, and Atlanta-based business process outsourcing (BPO) for Rs697 crore.

With this acquisition, Apollo Health Street becomes one of the world''s largest healthcare outsourcing companies, said, Dr. Prathap C Reddy, chairman. The company is an associate of Apollo Hospitals Enterprise Limited.

For Apollo Health Street, this is the fourth acquisition and second one in the US and some more may be on the anvil, said Reddy.

After taking into account the fund needs for working capital and other transaction processing functions, the total outlay for Apollo Health Street comes to $185 million. The acquisition will be funded through a combination of debt and equity.

Apollo Health Street has tied up with Bank of India and Barclays Capital for $135 million and the balance will be funded through promoters'' equity - Apollo Hospitals ($25 million), Temasek Holdings and One Equity Partners, the investment arm of J P Morgan, bring in the balance in the equity holding ratio.

The Indian BPO has employee strength of 1200 and Zavata has around 1000 with 459 working in its Hyderabad centre. The combined entity will have a customer base of 160.

In 2003, technology entrepreneur Satish Sanan, Mellon Ventures and BV-Cornerstone
Ventures, LP (BV-CV) made a strategic investment in Zavata, Inc, formerly known as STI Knowledge, Inc.

"The acquisition puts Apollo Health Street as a fully integrated healthcare BPO unit with further capabilities in providing enterprise support services," said Sangita Reddy, managing director.

According to Divya Sehal, COO, the US healthcare outsourcing market could be divided into two- providers side (hospitals) and the payer''s side (insurance companies). Both are huge in size and offers good opportunity.

Meanwhile the company is building a contact centre in Chennai at an outlay of Rs20 crore. While the total seating capacity will be 2,000, the company will hire 400 people in the first phase and scale it up based on the needs. Presently the company has centres in Delhi and Hyderabad.

According to Reddy, the company would close this fiscal with a turnover of over Rs400 crore. "Each of our contract size varies between $1 million and $5 million," Ms Reddy added.