Virtusa, a US-based IT consulting and outsourcing company, has acquired a 53% stake in Polaris Consulting & Services, an Indian provider of IT solutions primarily to banking and financial services. The Americans are paying $270 million for the firm, which will see more than 7,500 employees join its global undertakings.
Founded in 1996 in Massachusetts, Virtusa currently has operations in North America, Europe, and Asia. The company provides a range of IT services, including IT consulting, application maintenance, development, systems integration and managed services.
As part of Virtusa’s expansion strategy – the IT firm currently has just under 10,000 professionals and a strategy to double in size in the coming years – Virtusa has decided to purchase Chennai-based Polaris Consulting and Services. Polaris has been under merger scrutiny off late – in 2013 it was reported that Tech Mahindra was working on a deal, while more recently also Fiserv and Genpact have been linked to the Indian organisation. In a move to realign its positioning in the market, last year Polaris Financial Technology (Polaris FT) carved out its products business into an independent company (Intellect Design Arena), and rebranded as Polaris Consulting and Services.
Through the acquisition, Virtusa significantly broadens and deepens its financial services service portfolio. Virtusa has an established track record in consumer and retail banking, while Polaris’ main strength lies in corporate and investment banking, with the bundling of the two creating a complementary offering across the banking landscape. The deal also expands its presence in key markets and enhances the ability to pursue larger consulting and outsourcing contracts, the buyer said in a statement. Following integration, Virtusa will add approximately 7,650 employees to its footprint, and in addition unlock over $100 million in savings over the next three fiscal years through synergies and efficiency gains.
Commenting on the transaction, Kris Canekeratne, Virtusa’s Chairman and CEO, says, “Polaris brings a terrific team and an attractive, blue-chip client base to our organisation. We are enthusiastic about working with the Polaris team to build out our platform and offer clients a distinctive set of offerings.” Jitin Goyal, CEO & Executive Director of Polaris, adds “Virtusa and Polaris share a common goal of delivering best-in-class solutions and the highest level of service excellence to our clients. I believe the combination of the two companies will enable us to better address our clients’ most critical business objectives.”
The deal was advised by M&A experts from seven firms. J.P. Morgan acted as financial advisor to Virtusa. Goodwin Procter and ALMT Legal Bangalore acted as legal advisors to Virtusa. Credit Suisse acted as primary financial advisor and Spark Capital as co-advisor to Polaris. J Sagar Associates acted as legal advisor for Polaris and AZB & Partners acted as legal advisor for Orbitech.