IBS Journal December 2015


Intellect Design Arena’s MD denies insider share dealing


Intellect Design Arena’s chairman and MD, Arun Jain, has denied allegations that he used his inside knowledge to sell Polaris shares. Intellect was formed last year when


Polaris Group (Jain founded the compa- ny back in 1993) announced the demerger of its products business line into an inde- pendent entity – which became Intellect Design Arena. Jain stepped down as MD of Polaris late last year, to become MD of Intellect Design Arena. Jain, and former CFO R Srikanth, have been penalised by the Securities and Exchange Board of India (SEBI) for alleged insider trading in 2008.


Jain has been hit with a fine of IND 184 million ($2.75 million), while Srikanth must pay IND 1.96 million ($29,490) for ‘alleged- ly making illegitimate gains through trad- ing in shares of the company while in the possession of unpublished price sensitive information’. Jain says the amount asked to be


deposited by SEBI has been deposited ‘under protest’. He states: ‘The interim order by its


very nature is not a conclusive finding … I would be taking all steps as legally advised to defend myself against the serious harm to reputation caused by this order includ- ing by contesting vigorously the contents


and conclusions drawn by SEBI.’ Jain adds that SEBI’s previous order


of October 2012 involving the selling of 15,080 shares was ‘quashed’ by the SAT (India’s Securities Appellate Tribunal) in December 2013 with SEBI ‘unconditionally allowing the appeal’. Polaris Group’s other business line that


was created as a result of the split – the ser- vices outfit called Polaris Consulting & Ser- vices – is in the process of being acquired by Virtusa, a US-based services provider (see the story below). In a statement, Jain says: ‘In the last 13


years since March 2002, I have not sold a single Polaris share.’


Antony Peyton


Polaris Consulting & Services offloaded to Virtusa in $270m deal


US technology services provider Virtusa has acquired a majority stake in Indian firm Polaris Consulting & Services. As part of a share purchase agree-


ment signed by the two firms, a subsidiary of Virtusa will gain around 51% of Polaris Consulting’s share capital. The deal sees the Polaris shares valued at around $3.36 each, bringing the total purchase price to around $270 million. In accordance with the terms and con- ditions of the deal, Virtusa will also make an unconditional mandatory offer to the public shareholders of Polaris Consulting & Services to purchase up to 26% more of the Indian company.


Expansion The agreement will enable Virtusa to ex- pand its addressable market and tap into a wider global audience, says the firm’s CEO, Kris Canekeratne. The two companies highlight the


complementary nature of their domain expertise: Virtusa is strong on the retail banking side, whilst Polaris’ strength is in corporate and investment banking. Virtu- sa says it ‘expects to realise over $100 mil- lion of cumulative revenue synergies over


© Virtusa


the next three fiscal years from the busi- ness combination’. Virtusa and Polaris collectively have


18,000 employees, generating $826 mil- lion of pro forma revenue for the twelve months ended 30th September 2015. The acquisition is expected to close


in March 2016, subject to regulatory approval. Citigroup Technology has designat-


ed the merged Virtusa and Polaris firm as its preferred vendor for enterprise-wide IT services, having been a long-standing partner of the Polaris Group. Virtusa will now also be deemed a contracting part- ner by Citi.


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‘Digital powerhouse’ Arun Jain, chairman of Polaris Consulting & Services, says that the deal will enable a refocus on the firm’s software-based sister company, Intellect Design Arena, which he is aiming to turn into a ‘global digital powerhouse’. Intellect Design Arena recently report-


ed a 44% revenue rise year-on-year, with much of that growth set to be reinvested in sales and marketing. Recent projects under its wing include a wholesale bank- ing digitalisation with Hong Leong Bank in Malaysia and a core systems implementa- tion at Sri Lanka’s HDFC Bank.


Alex Hamilton


IBS Intelligence has launched its IBS Chat Forum, a global platform to bring industry participants together on everything related to banking and financial services technology. Log on to www.ibsintelligence.com/ibschat and connect with peers across the globe now!


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