WNS Announces multi-year $1 billion BPO contract with Aviva
July 10 2008 - 12:21PM
Business Wire
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
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