Polaris-Virtusa deal gets RBI, CCI and Sebi approval

In Nov 2015, Virtusa agreed to acquire majority stake in Polaris in a $270 mn deal

Regulators, including RBI and CCI, have given their nod for Polaris Consulting and Virtusa Consulting Share Purchase Agreement (SPA). In November 2015, US-based IT outsourcing firm Virtusa Corporation has acquired to acquire majority stake in Polaris Consulting in a $270 million deal.

On Friday in an announcement to the Exchange, Polaris said that it has got RBI approval on February 5, CCI's approval on February 18 and Sebi's approval on February 23 for the SPA.

With the regulatory approvals in place, the transaction is expected to complete in around two weeks, said Arun Jain, who has been the promoter of Polaris Consulting Services Ltd (PCSL). Following the transaction, he would also step down from the position of Chairman of PCSL.

On November 5, Polaris' promoters, including Arun Jain, announced an agreement with US-based Virtusa under which the latter's subsidiaries were to acquire 53 per cent stake for Rs 1,173 crore, with a further intention to raise this to 75 per cent.

promoter sellers of Chennai-based IT service provider Polaris Consulting & Services Ltd, including its founder and chairman Arun Jain, would get around Rs 639.80 crore out of the deal announced on Thursday. Virtusa has entered into a definitive Share Purchase Agreement (SPA) to acquire around 53 per cent of Polaris from certain promoter and promoter entities led by Arun Jain and certain other shareholders for around Rs 1,173 crore, through a subsidiary.

From the promoter's family, while Arun Jain and his family will benefit the most, outside investor Rakesh Jhunjhunwala, who held 50 lakh shares in the company, will be getting Rs 110.36 crore. This is more than what Jain, who founded the company will be getting individually, with 43.22 lakh shares.

According to Virtusa's filing to US market regulator, acquisition consideration to the promoter, Arun Jain, and promoter led family will be Rs 639.80 crore. These include Rs 441.92 crore for Polaris Banyan Holdings Pvt Ltd, owned by Arun Jain, Rs 95.40 crore to Arun Jain, Rs 23.23 crore to Manju Jain (Arun Jain's wife), Rs 17.41 crore for Arun Jain (HUF), Rs 13.67 crore for Uday Jain (son of Arun Jain) and Rs 1.32 crore for Aarushi Jain (daughter of Arun Jain).

While other eight promoter sellers, promoter led family members, would make around Rs 97.23 lakh, Yogesh Andlay, one of the earlier promoters of Polaris will be getting Rs 45.85 crore from this transaction.

To the investor sellers, the sale of shares will fetch an amount of Rs 385.36 crore.

Finally, among the other sellers the major beneficiary would be Rakesh Jhunjhunwala. He would be getting Rs 110.36 crore for his stake in the company. Followed by Arun Sekhar Aran (Rs 9.68 crore), Konark Trust (Rs 3.31 crore), Orbitech Employees Welfare Trust (Rs 19.86 crore) and Amit Goela (Rs 4.41 crore).