on how the acquisition catapults the company into the bigger league, and makes it a major player in the insurance segment. Excerpts: How does acquiring Aviva's BPO operations fit into the overall strategy of the firm?
It will take our company to the next level and transform WNS into the leading offshore BPO provider in the insurance industry. By successfully delivering a $1 billion contract, it puts us into an even bigger league and will allow us to effectively compete for more deals of this size in the future. The contract gives us over $100 million in annualised revenue from fiscal 2010, and an estimated $1 billion in revenues over the life of the contract "" which is eight years and four months.
Besides a key aspect of our contract with Aviva includes a long-term strategic exclusivity clause from Aviva for all in-scope services related to Aviva's life and general insurance businesses in the UK and Canada. It also provides privileged access to WNS for future opportunities with Aviva's global operations.
The acquisition is accretive from the first year considering both net margins and earnings per ADS, excluding amortisation, share-based compensation and related fringe benefit taxes. We now have a total of over 7,400 employees with tremendous domain knowledge in the insurance space.
How did you fund the acquisition?
The deal is being funded through cash from internal accruals and debt in the form of a bank loan. I Cannot share information on advisors or the name of the bank except to say that it is a consortium of financial institutions led by a bank in the UK and a bank in Canada.
Is the valuation of captives high in view of the current market condition?
We believe it is a fair valuation for the financial and strategic benefits it provides us. This valuation represents approximately two times fiscal 2010 estimated revenue. Strategically, it enhances WNS' position as the leader in the fast-growing insurance BPO segment, bolsters our offerings to deliver end-to-end services not only in the insurance space but to other large market segments.
What is your current acquisition strategy?
Our acquisition strategy continues to be the same as before. We will look at both organic and inorganic growth opportunities. We will look to acquire capabilities which enable us to deliver greater value to our clients. The company has been trying to strengthen its Insurance practice. Business process outsourcing, in the insurance industry is still at a nascent stage of growth.
This industry offers an addressable market of $20-30 billion dollars by 2012 making insurance one of the most attractive industry segments to target for BPO services. This acquisition enhances our leadership position in the insurance BPO segment.
