Blue Star Capital Plc - Proposed Investment in India Outsourcing Services plc

Blue Star Capital plc (AIM: BLU), the company created to provide seed capital for early stage companies, is pleased to announce it has led the formation, and is planning to invest in, India Outsourcing Services plc, a company that today revealed plans to float on the Alternative Investment Market (AIM).

India Outsourcing Services is the first company to be formed by Blue Star following Blue Star’s flotation on AIM in October 2004.

The full text of India Outsourcing Services’s press announcement follows:

INDIA OUTSOURCING SERVICES PLC
(India Outsourcing” or “the Company”)

Intention to Float on the Alternative Investment Market of the London Stock Exchange

India Outsourcing Services plc, a company formed to capitalise on acquisition and investment opportunities in the Indian business process outsourcing (BPO) market, is pleased to announce its intention to seek Admission for its shares to trade on the Alternative Investment Market (AIM) by way of a Placing.

Blue Star Capital (AIM: BLU), the recently floated investment company, has been instrumental in the formation of India Outsourcing and proposes to make a significant investment in the Placing.

Highlights

• India Outsourcing has a strong management team. The Company’s Chief Executive is Amit Pau, who has more than 10 years’ experience as a senior executive in the global telecoms industry. He was formerly managing director of Vodafone Multi-Media and a Non-Executive Director of Vodafone Spain and of Radamec Group plc. The Company’s Board includes Haresh Kanabar, Blue Star Capital’s Chief Executive, as Chairman and Nigel Robertson, Blue Star Capital’s Chairman, as Non-Executive Director.

• The Company has been established to capitalise on acquisition and investment opportunities in India’s BPO market, which has grown rapidly with the rise of “offshoring”. The BPO market includes a wide range of services including call centres, help desks, back office operations, IT services and customer service operations.

• The Indian BPO market is forecast to grow from $2.3 billion in 2002 to $8.5 billion in 2008 (source: NASSCOM). The global BPO market is forecast to grow to a market size of between $200 billion and $250 billion in 2008 (source: IDC).

• On Admission, the Company will have no trading businesses although a number of potential targets have been identified.

• India Outsourcing is raising gross proceeds of £500,000 by way of a Placing.

• The funds raised by the Placing will be used for carrying out due diligence on potential acquisitions and for the Company’s initial working capital requirements.

• It is expected that trading in India Outsourcing shares will commence on AIM in early December.

• Durlacher is the Company’s nominated adviser and broker.

On the plans for the flotation, Haresh Kanabar, India Outsourcing’s Chairman, said: “We are delighted to be able to launch a vehicle on the Alternative Investment Market in London that will give investors an opportunity to gain exposure to such an attractive growth market in India. We believe we have the experience and infrastructure to identify and acquire opportunities in the Indian BPO market, thereby creating value for our shareholders.”

For further information:

Blue Star Capital plc	Tel: 020 7070 7283
Nigel Robertson, Chairman
Haresh Kanabar, Chief Executive
Durlacher Limited	Tel: 020 7459 3600
Jonathan Retter
Katherine Roe
Buchanan Communications	Tel: 020 7466 5000
Mark Court Elly Williamson