Coming off the biggest initial public offering of a technology company in Canadian history, Telus International Inc. is in a good position to buy its way into new markets.

But Chief Financial Officer Vanessa Kanu says the subsidiary of the $11 billion Canadian telecommunications giant Telus Corp. will stick to its knitting of helping clients maximize customer experience for the foreseeable future. Telus International saw its shares rise 30% from the $25 offering price on its first day of trading Wednesday before falling back to close up just over 21%.

The offering gave the company a cash infusion of nearly $500 million it plans to use to repay debt and fund acquisitions.

The public markets have been a favorite way for big companies to raise cash for subsidiary operations lately. Last week, Qualtrics International Inc. raised more than $1.5 billion in an IPO orchestrated by parent company SAP SE. IBM Corp. is planning a spinoff of its massive $19 billion managed infrastructure unit by the end of this year.

Technically, the Telus transaction isn’t a spinoff, since parent Telus Corp. will retain a two-thirds share and majority voting rights. The market dynamics were too favorable to ignore the allure of an IPO, Kanu said.

“We had other funding mechanisms available, but an IPO had always been part of the overall strategy,” said the CFO, who joined Telus International in September after 16 years at Mitel Networks Corp., most recently as CFO. “The markets are doing well, and investors want to invest in companies with sound fundamentals. It’s also a bit of branding event, which is good for the company.”

The event is the culmination of a nearly 14-year journey that started when Telus Corp. bought Ambergris Solutions Philippines Inc., a boutique supplier of business process outsourcing services. Ambergis had been an early mover in the developing CX market and Telus continued to invest, growing its subsidiary to $1.9 billion in revenue and nearly 50,000 employees across 20 countries.

Chance to incubate

Telus International’s Kanu: Parent company “provided us with the ability to incubate and develop.” Photo: Telus International

Telus Corp.’s ownership “has provided us with the ability to incubate and develop within their own framework. We think it’s amplified growth,” Kanu said. The crowning event was the company’s acquisition exactly one year ago of Competence Call Center Gmbh, which filled a major gap in its portfolio.

Along the way Telus International has amassed a base of 600 customers, including notable reference accounts like Google LLC, Uber Technologies Inc., ByteDance Ltd.’s TikTok, PayPal Holdings Inc. and the Zara brand of clothing retailer Inditex SA.

The CX market encompasses a diverse variety of technologies and services ranging from customer relationship management to call center operations to marketing automation. Grand View Research Inc. expects the global market to grow nearly 18% annually to more than $23 billion by 2027.

Telus International already has a stake in most segments of the market. Although Chief Executive Jeffrey Puritt has been vocal about his intentions to use the IPO proceeds to fund acquisitions, Kanu declined to specify what gaps the company still needs to fill. But she noted that “historically our approach has been that geographic diversification and cultural alignment are very important.”

The lion’s share of the company’s revenues currently come from North America but, she said, “you’ll see a lot more coming from Europe, Asia and Central America in the future.” Financially, the company intends to pursue a balanced approach to growth and profitability. “Our [earnings before interest, taxes, depreciation and amortization] is just over 22%,” she said. “Double-digital growth with healthy EBITDA is a pretty healthy business.”

Telus International has prospered in a crowded market primarily because of its culture and active corporate social responsibility involvement, Kanu said. “We lead with an employee-first mentality and we take CSR seriously,” she said. “Clients tell us that’s an important element in partnering with us. They want to work with team members who are highly engaged.”

That’s one reason the company isn’t drawing down its global office space in the wake of pandemic-mandated work-from-home arrangements. “A lot of team members want to get back to the office,” she said. “We’ve invested a lot of money in making our offices easy to work and collaborate in, even having a massage without leaving the building.”

Photo: Wikimedia Commons