Polaris Consulting & Services, a provider of financial technology products, is in the final stages of being acquired by US-based Virtusa Corporation for Rs 2,310 crore, according to a media report, with a formal announcement expected to come by the month-end.
The founder of Polaris Arun Jain, who established the company two-decades back in 1993, will be exiting the company as Virtusa looks to buy a controlling stake in the Indian IT firm, a report in The Economic Times said. Virtusa, a global information technology services company with headquarters in Massachusetts, USA, was founded after Polaris in the year 1996 by Sri Lankan entrepreneurs Kris and Tushara Canekeratne.
Polaris is said to be in the final stages of the deal with Virtusa's founders valuing it close to $350 million (Rs 2,310 crore), at 18 per cent more than its current market valuation of $295 million (Rs 1,904 crore).
The sale process of Polaris Consulting is believed to have started six months back by Zurich-based global bank Credit Suisse, according to the report, following which the shares of the firm have risen as much as 30 per cent on the Bombay Stock Exchange over the period. Tech Mahindra, HCL Tech and Genpact are said to have been in the race too for the acquisition but Virtusa appeared as the frontrunner offering almost 20 per cent more than its current valuation, the report said.
Jain is likely to sell his 28.9 per cent stake in the company with existing PE investor The Rohatyn Group controlling about 19 per cent stake in the company. Investor Rakesh Jhunjhunwala holds 5 per cent stake in the company.
Emails sent to Polaris and The Rohatyn Group remained unanswered while going to press, the ET report says. Polaris' spokesperson could not be reached on his mobile. A Virtusa spokesperson was quoted as saying the firm does not comment on market rumours and makes announcement using appropriate channels.
What the deal means for Virtusa?
The US-based company currently has little access to the Indian market. The deal with give it a wider access in the fast emerging market of India, especially in the banking and financial services space in which Polaris has a stronghold. Virtusa post the acquisition will compete with the Indian offshore software companies.
The link between Virtusa and Polaris
Financial services conglomerate Citigroup brings in over 30 per cent of the revenues to Polaris Consulting being its single largest client. Interestingly, it also happens to be one of the main clients for Virtusa and is said to have played a key role in finalizing the deal, the report said.
see more at: http://www.businesstoday.in/current/deals/polaris-consulting-all-set-to-be-acquired-by-virtusa-corp-for-rs-2310-crore/story/224854.html
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