Baring PE Asia to acquire US-listed IT services firm Virtusa for $2b

Photo: REUTERS/Beawiharta

Alternative investment major Baring Private Equity Asia (BPEA) has reached an agreement to acquire NASDAQ-listed digital engineering and IT services firm Virtusa Corporation in an all-cash transaction valued at about $2 billion.

Under the terms of the deal, BPEA will acquire Virtusa’s outstanding shares of common stock for $51.35 per share, representing a premium of approximately 27 per cent to the closing price on September 9.

Virtusa said the transaction price implies a valuation of 16.2x Firm Value / Last Twelve Months EBITDA as of June 30, 2020.

“This transaction represents a strategic evolution for Virtusa and a unique opportunity to take our business to new heights at a time of accelerating digital adoption,” said Kris Canekeratne, Chairman and CEO of Virtusa, which is based in Southborough, Massachusetts.

Virtusa provides digital business strategy, digital engineering, and IT services and solutions. Its key clients include Amazon Web Services Premier, Google Cloud Premier, Microsoft Azure Gold, and a host of Global 2000 enterprises.

The transaction follows an independent review of the offers of other potential buyers and financial sponsors. Virtusa said the review came after its Board of Directors received an unsolicited proposal to acquire the company on July 20.

“The Virtusa Board unanimously determined that the all-cash premium transaction with BPEA for $51.35 per share in cash maximizes value for Virtusa’s shareholders,” the IT firm said.

BPEA, formed in 1997, is one of Asia’s largest private equity investment houses with a total committed capital of over $20 billion.

The company runs a private equity program for buyouts and investments in companies with operations in the Asia Pacific region and also manages dedicated funds focused on private real estate and private credit.

In January, BPEA reached the final closing of its seventh PE fund at the hard cap of $6.5 billion in total capital commitments. The Baring Asia Private Equity Fund VII, raised in 2019, exceeded its target by $1 billion and is over 60 per cent larger than the predecessor fund, The Baring Asia Private Equity Fund VI.

BPEA’s current portfolio companies include a host of IT firms. These include US healthcare technology and business services provider CitiusTech; India-based global IT solutions and services firm Noida (formerly NIIT) Technologies; and another Indian IT consulting and digital solutions provider, Hexaware Technologies.

Jimmy Mahtani, Managing Director of BPEA, said technology is continuing to drive marketplace evolution at an unprecedented pace, creating new opportunities as well as complexities.

“We are excited to partner with the Company in its next phase of evolution. We’re pleased that the Board has approved our offer unanimously,” Mahtani added.

The acquisition is scheduled to close in the first half of 2021 and is subject to the approval of Virtusa’s shareholders, customary regulatory requirements, including approval from The Committee on Foreign Investment in the United States (CFIUS), and customary closing conditions.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.