Softway
Softway Contact Center was the largest independent call center operator in Brazil when it was sold in 2007 to Tivit, a technology company owned by the Votorantim group. At that time, all the other call centers in Brazil were linked to telecom companies. During the seven years that Softway was owned by TMG I PE Fund and advised by the preceding company of TMG Capital, the company had average annual growth in terms of employees, revenue (R$) and EBITDA (R$) of 37%, 44% and 46%, respectively.
Identified opportunities and investment
In the early 2000s, the Brazilian contact center industry was highly fragmented, with several telemarketing companies operating at a relatively small scale. Compared to international standards, the Brazilian call center market was growing fast, with companies looking to outsource their operations. Meanwhile, the Brazilian economy was experiencing a high growth period as it benefitted from the Real Plan stabilization and the excess of global liquidity.
In February 2000, the company that preceded TMG Capital helped TMG I PE Fund become the controlling shareholder of Softway. This investment was motivated by the opportunity to consolidate the industry, the market’s high growth rates, and the various opportunities to expand using technological advances.
Investment thesis
The participation of TMG I PE Fund in Softway focused on the following sources of value creation:
-
Rapid Growth
The company's growth took place both organically and through acquisitions. Under TMG leadership, two complementary follow-on acquisitions were completed. At the time of TMG’s sale of Softway, the company had grown from 290 to 3,100 positions.
-
Improving service level and reducing attendant´s turnover
The Call Center industry is typically characterized by the high turnover rate of employees who generally are young and use this as a first job. Under the leadership of TMG, Softway created a corporate university to provide its employees with a two year degree recognized by the Brazilian Ministry of Education. The courses were low cost and had a strong appeal among employees. As a result of this project, Softway had the lowest turnover rate of the sector, thus ensuring a better service to its customers. In parallel, the costs associated with new employee training were reduced as employees started seeing value in a longer career at Softway.
-
Creating a differenciated value proposition for its clients
Beyond telemarketing services, Softway provided Help Desk services, collection and CRM. With these services in the portfolio, the company was able to offer better solutions to its clients and increase market share.
In July 2007, Softway was sold to Tivit, a subsidiary of the Votorantim group. The investment multiplied the investor´s capital by 5x, and the internal rate of return was 24% per year in Reais and in US Dollars.