United Utilities has finally sold its business process outsourcing arm Vertex Data Sciences to a group of private equity firms. A consortium led by Oak Hill Capital Partners, and which includes GenNx360 and Knox Lawrence International, has agreed to pay 217.5m pounds ($427m) for the Manchester, UK-based firm, and expects to complete the acquisition by the end of March.

Vertex provides BPO services including contact center management, finance and accounting outsourcing, and human resources outsourcing. It has approximately 9,000 employees located mainly in the UK, North America, and India.

The sale process began over six months ago when United hired investment bank Merrill Lynch to review its options with regard to Vertex. At the time, reports surfaced that the company was looking to get up to 500m pounds ($982m), and a number of companies were linked to the deal including private equity firm 3i Group Plc, Raman Roy’s Quatrro BPO Solutions, and the major Indian IT services players: Infosys, Wipro, and Tata Consultancy Services. The latter was reported to have been close to finalizing a deal last summer, but could not agree on price.

Despite the high level of interest, United appears to have had to accept a relatively low price for Vertex. The purchase price works out at less than one times its revenue for its most recent half-year results. Compare this to offshore services provider Genpact, another of Oak Hill’s BPO investments, which is expected to have an IPO later this year that will value it at up to $5bn, which would be five times its ambitious $1bn revenue target for 2008.

The two valuations underline Vertex’s stagnant growth. Its revenue fell 8% for the six months to the end of September 2006, generating an operating income before restructuring costs which fell to 3.5m pounds ($6.9m) from 8.1m pounds ($15.9m). Vertex said the dip was due to its changing contract portfolio, which included a number of major new deals in the local government sector. In 2004, it secured a 15-year deal worth 427m pounds ($839m) with Thurrock Council, and the company has also won significant deals with Hertfordshire County Council and Westminster City Council.

Vertex has also been looking to establish itself in the financial services market. In March 2005, the company paid 95m pounds ($187m) for Marlborough Stirling Plc, which was renamed Vertex Financial Services. In February 2006, Vertex further expanded this operation with the takeover of 1st Software Group Ltd, which develops back-office software for independent financial advisers.