India’s WNS Buys Insurer Aviva’s Business Process Offshoring Business

July 10, 2008

Back-office firm WNS (Holdings) Ltd said it acquired insurer Aviva’s business process offshoring (BPO) business for about $228 million, a deal that will give the company $1 billion worth of outsourced work over a period of eight years.

WNS also raised its revenue and earnings outlook for the fiscal year ending March 31, following the deal.

Shares of Mumbai, India-based WNS, which is majority-owned by buyout firm Warburg Pincus, rose as much as 11 percent Thursday on the New York Stock Exchange.

Under the deal, WNS acquired Aviva Global Services (AGS), the UK-based insurer’s business process offshoring company, in India and Sri Lanka.

WNS will be the long-term strategic BPO services provider to Aviva’s UK and Canadian businesses for the duration of the contract, which is of eight years and four months.

WNS funded the transaction through a combination of cash and a bank loan of about $200 million, the company said in a statement.

The deal will make Aviva the company’s largest client, contributing 20 percent, less repair payment, to its revenue in fiscal 2010.

“Insurance is in general a stable industry in recession. It’s a good industry to do business in these times and Aviva Global Services gives us the credibility to expand further in the industry,” WNS Chief Executive Neeraj Bhargava said by phone.

OUTLOOK RAISED

The company said it now expects revenue, less repair payments, for fiscal year 2009 of $425 million to $435 million, compared with its previous outlook of $373 million to $378 million.

It expects net income, excluding one time items, to be between $46 million and $49 million for the period, up its previous projection of $44 million to $46 million.

Analysts were expecting the company to earn 90 cents a share on revenue of $385 million, according to Reuters Estimates.

WNS has been providing BPO services to Aviva since 2004, 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.

Following the deal, WNS will assume control of AGS’s captive operations in Bangalore and Colombo. The WNS-managed Colombo facility was transferred to Aviva arm in July 2007.

Also, AGS’s Pune and Chennai operations, which are currently run by other providers, will be transferred to WNS within 30 days.

WNS, which draws about half its business from British and European operations, in April acquired a British auto insurance claims-processing services provider, Call 24/7 Ltd.

Shares of the company were trading up about 73 cents at $16.63 in late afternoon trade. They have risen about 30 percent since touching a low of $12.81 in January this year.

(Reporting by Purwa Naveen Raman and Rina Chandran in Mumbai; Editing by Gopakumar Warrier)

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