Virtusa Crpratin t acquire cntrlling interest in Plaris Cnsulting & Services Limited Greatly strengthens ur psitin in Banking and Financial Services Nvember 5, 2015 1
Frward Lking Statements This presentatin cntains frward-lking statements which are made pursuant t the safe harbr prvisins f the Private Securities Litigatin Refrm Act f 1995. This presentatin may make express r implied frward-lking statements relating t, amng ther things, Virtusa's expectatins cncerning management's frecast f financial perfrmance, the grwth f ur business and management's plans, bjectives, and strategies, the expected timing f the cmpletin f the acquisitin f Plaris described in this press release and the related debt financing; the expected benefits f the transactin, including revenue synergies and an expanded relatinship with Citi; Virtusa s immediate and lng-term financial expectatins fr the cmbined business, including expected grwth, expected pr frma revenue fllwing cnversin f Plaris histrical financial statements int U.S. GAAP, pr frma GAAP and Nn-GAAP earnings per share; expectatins regarding fiscal 2016, 2017 and 2018 perfrmance f the cmbined business; and the future peratin, directin and success f the cmbined businesses. Existing and prspective investrs are cautined nt t place undue reliance n these frward-lking statements, which speak nly as f the date heref. Virtusa undertakes n bligatin t update r revise the infrmatin cntained in this presentatin, whether as a result f new infrmatin, future events r circumstances r therwise. Fr additinal disclsure regarding these and ther risks faced by Virtusa, see the disclsure cntained in ur public filings with the Securities and Exchange Cmmissin, including ur Annual Reprt n Frm 10-K fr the fiscal year ending March 31, 2015 as filed with the Securities and Exchange Cmmissin. 2
Transactin Overview Transactin VRTU t acquire cntrlling interest in Plaris Cnsulting & Services Limited 51.7% frm certain sharehlders (fully diluted capitalizatin methd) 26% uncnditinal mandatry ffer t public sharehlders (subject t max f 74.99%) Transactin cnsideratin fr the abve ~ $270 M in cash Clsing expected in Q4 FY16, subject t cnditins t clse & regulatry apprvals Strategic Ratinale Prvides end-t-end IT cnsulting and utsurcing services acrss BFS clients Retail banking, crprate banking, capital markets, payments, and GRC Expands ur addressable market Enhances ability t pursue larger cnsulting and utsurcing cntracts Financial Ratinale $100 M+ cumulative revenue synergies targeted ver the next three fiscal years Increasing mix f recurring revenue Gegraphic diversificatin and expansin Strategic use f India-based cash Financing Cash n hand and lw interest debt Up t $300 M transactin financing cmmitment in place Reasnable pst clsing funded debt-t-ebidta rati 3
Plaris at a Glance (1) Strng industry slutins acrss banking & financial services Deep dmain expertise Over 20 years f banking experience Glbal client base Blue chip clients acrss Nrth America, Eurpe & Asia Preferred relatinships ~7,650 (2) Team members glbally, including 6,650+ IT prfessinals Strng financials $150 M revenue (3) Well capitalized with $44.8 M cash, cash equivalents & Investments (1) Financials & metrics as f Sep 30, 2015 (2) Adjusted fr ptential divestiture f BPO as f Sep 30, 2015 (3) Adj. fr BPO & certain pr-frma US GAAP adj. fr 6 mnths ended Sep 30, 2015 Crp Banking/Capital Markets Fcus Retail Banking 16% Insurance & Others 15% Others 1% Eurpe 21% ROW 27% Glbally Diversified Services With High Visibility Testing 14% App Main 39% Crprate, Treasury & Capital Markets 69% Americas 52% App Dev 46% 4
Strategic Summary 1 Creates a fully integrated leader in financial services technlgy and peratins Cnsumer banking + Crprate + Investment = banking banking Glbal financial services 2 Greatly expands ur addressable market 10 f Tp-20 glbal banks Minimal Client Overlap > Strng Synergy Ptential Virtusa Plaris Lcatins 3 4 Enhances ability t pursue larger cnsulting and utsurcing cntracts Cnsistent with Virtusa s M&A strategy Strengthen Dmain > Add New Capabilities > Expand Ge Reach 5
Creates a differentiated, end-t-end service prvider delivering nextgeneratin, transfrmatinal BFS slutins VIRTUSA CORPORATION Retail and Cnsumer Banking Cnsumer experience Gvernance, Regulatry & Cmpliance Platfrm ratinalizatin & business transfrmatin Digital transfrmatin POLARIS CONSULTING & SERVICES Crprate banking Trade finance platfrm Transactin prcessing Capital markets Recurring revenue thrugh testing, utsurcing services The definitive prvider f end-t-end IT services t the BFS Segment 6
Expands ur addressable market & wrld-class client-base Banking & Financial Services Clients 7
Financial impact Expect cumulative revenue synergies f $100 M+ ver the next three years Preferred strategic partner status with Citi Gd strategic use f India-based cash Enhance revenue base Mre recurring revenue (app utsurcing, maintenance, testing) Gegraphic and client diversificatin Nn-GAAP EPS impact: ~($0.08) dilutive in FY '16, slightly dilutive in FY '17, accretive in FY '18 and beynd Virtusa Service ffering Virtusa Service ffering Cnsulting 46% Applicatin Outsurcing (recurring) 54% Cmbined entity* Service ffering Applicatin Outsurcing (recurring) 60% Cnsulting 40% Cmbined entity* Service ffering * T be firmed-up pst-transactin 8
Financing Financed thrugh a cmbinatin f cash and debt $300 M f cmmitted debt financing $200 M multi-draw 5-year term lan facility $100 M revlving credit facility (Dependent n MTO participatin) Lw interest rate: Flating, LIBOR + 2.25% t 2.75% depending n leverage rati Reasnable leverage rati f debt t EBIDTA at 2.2x Rapid deleveraging ver 5 years with annual amrtizatin and a bullet payment in year 5 Arrangers: JPMrgan and Bank f America, each cmmitted t 50% f the facilities 9
Summary Virtusa Crpratin enters int a definitive agreement t acquire a majrity interest in Plaris Cnsulting & Services Limited; 26% mandatry ffer Cmbinatin greatly strengthens ur psitin in Banking & Financial Services Industry segment Expands addressable market and synergy pprtunities acrss the cmbined client base Ability t pursue larger cnsulting and utsurcing pprtunities Lw cst debt financing and effective use f ffshre cash Transactin is expected t be accretive n a nn-gaap diluted EPS basis in FY18 and beynd Value creatin thrugh enhanced client partnerships, diversificatin, recurring revenue, and $100 M cumulative revenue synergies 10
Thank Yu Questins? Please e-mail William Maina frm ICR at William.Maina@icrinc.cm 11
APPENDIX 12
Standalne and Pr-frma Cmbined Revenue Mix Virtusa Revenue by service ffering Plaris Pr-Frma * based n Indian Accunting standards, may be subject t US GAAP cnversin adjustments 2QFY16 Revenue = $143 M 2QFY16 Revenue = $76.8* M 2QFY16 PF Revenue = $219.8 M Cnsulting 46% Applicatin Outsurcing 54% Cnsulting App Cnsulting 30% Applicatin Outsurcing* 40% Outsurcing 70% 60% Revenue by gegraphy * T be firmed-up pst-transactin Eurpe 22% ROW 7% Americas 71% Eurpe 21% ROW 27% Americas 52% Eurpe 22% RW 14% Americas 64% Revenue by industry grup Media & Infrmatin & Other 10% Tech & Cmmunicatins 35% Surce: Cmpany infrmatin BFSI 55% Retail Banking 16% Insurance & thers 15% Crprate, Treasury & Capital Markets 69% Media & Infrmatin & Other 11% Tech & Cmmunicatins 23% BFSI 66% 13
Financial impact f the transactin Fiscal Year 2016: Plaris expected t cntribute revenue f ~$70 M, in Q4 (ending March 31, 2016) * ~($0.08) dilutive t nn-gaap EPS, ~($0.55) dilutive t GAAP EPS including ~ ($0.23) frm transactin and integratin expenses GAAP and nn-gaap include ($0.07) f dilutin frm debt t finance the transactin Fiscal Year 2017: Plaris cmbinatin expected t be t be slightly dilutive t nn-gaap EPS Revenue synergies including preferred vendr status at Citi, ffset by: 2-year Citi prductivity savings cmmitments; if nt achieved, prvide minimum discunts Additinal Investments in Plaris in supprt f revenue grwth Higher interest expense frm deal-related financing Fiscal Year 2018 and beynd: Accretive t nn-gaap EPS in FY18 and beynd, based n: Acceleratin f revenue synergies Margin accretin frm rll ut f Delivery & Shared Services best practices Tax benefits related t interest expense Balance sheet deleveraging Anticipated additinal equity investments * Assuming an early January 2016 Clse 14