WNS (NYSE:WNS)
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WNS (Holdings) Limited (NYSE: WNS), a leading provider of global
business process outsourcing (BPO) services, today announced it has
entered into a transaction with Aviva, the world’s
fifth largest insurance group with $95 billion revenue in 20071.
This transaction is comprised of a Share Sale and Purchase Agreement,
backed by a Master Services Agreement, to acquire Aviva’s
offshore operations which run a number of its critical business
processes.
Pursuant to the Share Sale and Purchase Agreement with Aviva, WNS today
acquired all of the shares of Aviva Global Services (“AGS”),
its business process offshoring company. Since 2004, WNS has provided
BPO services to Aviva pursuant to build-operate-transfer (BOT) contracts
from facilities in Pune, India and Colombo, Sri Lanka. With this
acquisition, WNS will take over AGS’
operations comprising over 5800 seats as follows:
Assume control of AGS’s captive operations
in Bangalore, India; and Colombo, Sri Lanka. The WNS-managed Colombo
facility was transferred to AGS in July 2007
Transfer AGS’s Pune and Chennai operations,
which are currently run by other providers, within 30 days. AGS has
issued transfer notices to these third party providers.
The WNS-managed facility in Pune will remain with WNS.
Under the Master Services Agreement, which is of eight years and four
months’ duration, WNS will be the long-term
strategic BPO services provider to Aviva’s
UK, and Canadian businesses. Other providers will be capped on numbers
and duration as per existing contracts. As part of the MSA, WNS also
benefits from a recently signed AGS contract for approximately 580
employees with Aviva’s Irish subsidiary,
Hibernian. Based on the anticipated service requirements of these
businesses, as provided by Aviva, WNS estimates that the Master Services
Agreement could generate approximately $1 billion in revenues over the
life of the contract.
The total purchase consideration paid to Aviva for the transaction is
approximately £115 million ($228 million2),
subject to adjustments for cash and debt. WNS funded the transaction
through a combination of cash and a bank loan facility of approximately
$200 million.
“With this acquisition, WNS solidifies its
position as a premier offshore BPO provider,”
said Neeraj Bhargava, CEO, WNS Global Services. “Aside
from a large BPO contract, this significantly accretive acquisition
promotes our strategy of expanding market share in target industries,
greatly extends our scale, and bolsters our service offerings -- not
just in the insurance industry, but across all our businesses. Aviva
will be an active partner during the transition period, and we are
confident that our integration plans will result in a smooth transition.
We also see significant potential to grow our business with Aviva, not
only outside the UK, Canada and Ireland, which AGS serves today, but
also in new high growth areas such as analytics.”
Under the terms of the contract, WNS will provide a comprehensive
spectrum of life and general insurance processing functions to Aviva
including policy administration and settlement along with finance and
accounting, customer care and other support services.
“During the selection process, we evaluated
some of the best BPO providers in the global marketplace and selected
WNS based on their proven operational performance and alignment of both
culture and values. This contract allows Aviva to continue our working
relationship with a provider that truly understands the insurance
industry and has a tireless commitment to process excellence and
customer care, making WNS our partner of choice,”
said Cathryn Riley, Chief Operating Officer of Norwich Union Life, and
Chairman, Aviva Global Services, both business divisions of Aviva.
Continuing, Ms. Riley added: “We are proud of
the significant delivery capability that we have built offshore and we
remain firmly committed to offshoring. By transferring our captive and
third-party operations to WNS, Aviva benefits from WNS’
ability to bring us new perspectives and continue our focus on customer
service excellence. Having worked with WNS since 2004, we expect a
smooth transition period and look forward to a successful, long-term
partnership.”
Alok Misra, CFO, WNS Global Services, said: “This
acquisition adds immediate value to our shareholders as it is accretive
on both net income margin and EPS (excluding amortization of intangible
assets, share-based compensation and related fringe benefit taxes). It
gives us significant scale and an industry leadership position to pursue
growth-oriented opportunities. With the continued expansion of WNS’s
business and the addition and anticipated rapid integration of this
acquisition, we expect to reach an annualized run rate of close to $500
million in revenue less repair payments and $60 million in net income
(excluding amortization of intangible assets, share-based compensation
and related fringe benefit taxes), by the first quarter of fiscal 2010.
Notably, we are very pleased with the terms of our financing
arrangement. Our ability to raise capital in this environment -- at what
we believe are attractive terms -- speaks volumes about our credentials
and the prospects of this deal.”
With the acquisition and associated contract, WNS’
revenues and resources will increase significantly, positioning the
company to compete even more aggressively in the global outsourcing
marketplace. WNS’ estimate of expected
revenues over the term of the contract is based on initial billable
headcount of approximately 4,200 and growth expectations such as the
Hibernian ramp-up over the course of the contract, and not the minimum
headcount guarantee of 3,000 billable employees under the contract.
Following the agreement, WNS has provided revised guidance for the
fiscal year ending March 31, 2009:
Revenue less repair payments for fiscal 2009 is expected to be between
$425 million and $435 million, up from the company’s
previous guidance of $373 million to $378 million.
Net income (excluding amortization of intangible assets, share-based
compensation and related fringe benefit taxes,) for fiscal 2009 is
expected to be between $46 million and $49 million, up from the company’s
previous guidance of $44 million to $46 million.
WNS will host a conference call at 1:00pm EDT, July 10, 2008, to discuss
the acquisition. To participate, callers can dial 800-295-3991 from
within the U.S. or +1-617-614-3924 from any other country. The
participant passcode is 1352836.
A replay will be available beginning two hours after the end of the call
via phone for one week. To listen to the replay, callers can dial
888-286-8010 from within the U.S. or +1-617-801-6888 from any other
country. The replay passcode is 16975626. A replay will also be
available online at www.wnsgs.com for three months.
About WNS
WNS is a leading global business process outsourcing company. Deep
industry and business process knowledge, a partnership approach,
comprehensive service offering and a proven track record enables WNS to
deliver business value to some of the leading companies in the world.
WNS is passionate about building a market-leading company valued by our
clients, employees, business partners, investors and communities. For
more information, visit www.wnsgs.com.
Safe Harbor Statement under the
provisions of the United States Private Securities Litigation Reform Act
of 1995
This news release contains forward-looking statements, as defined in the
safe harbor provisions of the U.S. Private Securities Litigation Reform
Act of 1995. These forward-looking statements include statements
relating to the acquisition of AGS; Aviva’s
BPO service requirements and estimated revenue expected to be generated
under the Master Services Agreement; the expected billable headcount
need of approximately 4,200 staff and growth expectations over the
course of the contract with Aviva; the expected impact the transaction
may have on our revenues, revenue growth, strategy of expanding market
share, and expansion of our service offerings for the insurance
industry; the expected accretive impact of the acquisition; our
integration plan for the acquisition; our market position as an offshore
BPO provider for the insurance industry; expected annualized revenue run
rate, and our guidance for fiscal year ending March 31, 2009. These
statements involve a number of risks, uncertainties and other factors
that could cause actual results to differ materially from those that may
be projected by these forward looking statements. These risks and
uncertainties include but are not limited to technological innovation;
telecommunications or technology disruptions; future regulatory actions
and conditions in our operating areas; our dependence on a limited
number of clients in a limited number of industries; our ability to
attract and retain clients; our ability to expand our business or
effectively manage growth; our ability to hire and retain enough
sufficiently trained employees to support our operations; negative
public reaction in the US or the UK to offshore outsourcing; regulatory,
legislative and judicial developments; increasing competition in the
business process outsourcing industry; political or economic instability
in India, Sri Lanka and Jersey; worldwide economic and business
conditions, including a slowdown in the U.S. and Indian economies and in
the sectors in which our clients are based and a slowdown in the BPO and
IT sectors world-wide; our ability to successfully consummate strategic
acquisitions, as well as other risks detailed in our reports filed with
the U.S. Securities and Exchange Commission. These filings are available
at www.sec.gov. We may, from time to time, make additional written and
oral forward-looking statements, including statements contained in our
filings with the Securities and Exchange Commission and our reports to
shareholders. You are cautioned not to place undue reliance on these
forward-looking statements, which reflect management’s
current analysis of future events. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
1 According to Aviva’s
published results for fiscal year ended December 31, 2007
2 At exchange rate of £1.00
to $1.98