Attached files
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| 8-K - FORM 8-K - IGATE CORP | d8k.htm |
| EX-99.1 - PRESS RELEASE - IGATE CORP | dex991.htm |
 January 10, 2011
Phaneesh
Murthy
President & CEO
Sujit
Sircar
CFO
1
Exhibit 99.2 |
  Safe
Harbor Statement Safe Harbor Statement
Statements contained in this press release regarding the benefits of the
acquisition, the business outlook, the demand for the products and services,
and all other statements in this release other than recitation of historical facts
are
forward-looking
statements.
Words
such
as
"expect",
“potential”,
“believes”,
“anticipates”,
“plans”,
“intends”
and
similar expressions are intended to identify such forward-looking statements.
Forward-looking statements in the press release include, without
limitation, forecasts of market growth, future revenues, benefits of the proposed
acquisition, expectations that the acquisition will be accretive
to the results, future expectations concerning growth of
business, cost competitiveness and expansion of global reach following the
acquisition, and other matters that involve known and unknown risks,
uncertainties and other factors that may cause results, levels of activity,
performance or achievements to differ materially from results expressed or
implied by this press release. Such risk factors include, among others:
difficulties encountered in integrating business; uncertainties as to the timing of the
acquisition, including the consummation of the public offer under the Indian
Takeover Regulations and the tender offer under U.S. securities laws; the
satisfaction of the closing conditions to the transaction, including the receipt of
regulatory approvals; whether certain market segments grow as anticipated; the
competitive environment in the information technology services industry and
competitive responses to the proposed acquisition; and whether the companies
can successfully provide services/products and the degree to which these gain market acceptance.
Furthermore, in connection with the proposed acquisition, the Company intends
to borrow significant amounts, including by issuing high yield notes, and
will have to use a significant portion of its cash flows to service such
indebtedness, as a result of which the Company might not have sufficient funds to
operate its businesses in the manner it intends or has operated in the past;
Additional risks relating to the Company are set forth in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as well
as the Company’s other reports filed with the Securities and Exchange
Commission. Actual results may differ materially from those contained in the
forward-looking statements in this press release. Any
forward-looking statements are based on information currently available
to the company and it assumes no obligation to update these statements as circumstances change. This
document does not constitute an offer to purchase or to sell securities in any
jurisdiction. This presentation also includes non-GAAP financial
measures. Reconciliations of such measures are included in this
presentation.
2 |
  Acquisition
Of
Patni
Computer
Systems
Acquisition
Of
Patni
Computer
Systems
iGATE, through its subsidiaries, has entered into definitive agreements with the
three founders of Patni and
private
equity
firm
General
Atlantic
to
acquire
63%
of
the
outstanding
shares
of
Patni
Computer
Systems Ltd. (“Patni”) as of December 31, 2010
–
From the three Patni
founders 60,091,202 shares at a purchase price of Rs. 503.50 per share
representing 45.6% of current equity capital
–
From
General
Atlantic
22,913,948
(combination
of
ADS
and
shares)
at
a
purchase
price
of
Rs.
503.50 per share representing 17.4% of current equity capital
–
As per SEBI regulatory requirements, iGATE’s subsidiaries along with iGATE will
make an open offer for an additional 20.6% stake in Patni, if fully
subscribed, will account for 27,085,565 shares –
The transaction is valued at approximately $1.22 billion, including the mandatory
open offer to the public shareholders of Patni.
–
Subject to regulatory and other customary approvals, we expect the transaction
to close in the first half of 2011
–
The transaction will be funded through a combination of balance sheet cash, debt and
fresh equity issuance
–
Expect
deal
to
be
accretive
by
2012
on
a
cash
earnings
per
share
basis
–
Will use cash from operations to service and pay down debt
Structure of the combined company
–
Patni
Computer
Systems
Ltd.
will
remain
an
Indian
public
company
and
a
subsidiary
of
iGATE
corporation.
3 |
 There
are Multiple Benefits Realized From Combination There are Multiple Benefits
Realized From Combination Combined entity will have close to $1 billion in
revenue and over 24,000 in headcount Combination
will
create
a
compelling
new
go-to-market
strategy,
with
iGATE’s
differentiated
iTOPS
and
outcomes-based pricing model augmented by Patni’s
delivery expertise and focus on micro-verticals
Combination will bring together world class leadership that can create scale
synergies and growth Firmly positions iGATE-Patni
as a top-tier player in the highly-fragmented global IT industry
Combined company will have a strong presence across several verticals including
Banking & Financial Services, Insurance, Manufacturing & Retail,
Communication & Media, and Utilities Combined company can create a stronger
employer brand to help retain talent and reduce attrition – iGATE has been
ranked among top 3 in all the best employer surveys in India in the last 4 years
Increased access to global customers and entry into new geographies
Combined entity will have 360+ clients globally including top Fortune 500 blue chip
clients Healthy combined client mix: Top client –
13%, Top 5 –
38%, Top 10 –
49%
Combined global footprint with presence in North America (80%), EMEA (14%), and APAC
(6%) Diversified customer base –
two $100+ million customers, two $50+ million customers, and more than 36
$5+ million customers
Opportunity to cross-sell services to a broader client base
4 |
  Combination Creates A “Tier 1”
Player ...
Combination Creates A “Tier 1”
Player ...
Differentiated iTOPs
Offering
Ability to leverage deep
domain expertise to deliver
Outcome Based Solutions
Strong Banking and Financial
Services vertical expertise,
currently the fastest growing
sector in the outsourcing
space
Features in the top 3 employers
in India across surveys for last
several years
Attractive financial metrics
Management team
experienced in transformation
successes
Focus on micro-verticalisation
Deep bench of engineering
talent
Deep domain expertise across
Insurance, Manufacturing,
Retail & Distribution,
Communications, Media &
Utilities
Long term relationships with top
clients
Global presence
-
22 global
delivery centers, and offices in
30 locations worldwide
Stable financial performance
Combined revenue close to
$1Bn and employees 24,000+
Prequalified for large client
engagements
Outcome Based Solutions
across multiple verticals
Well diversified client base
Brings together world class
leadership
Opportunity for improved
financial performance due to
economies of scale
+
=
/
5 |
  iGATE's
Transformation Experience Is Leverageable In
Integration Of Patni
iGATE's Transformation Experience Is Leverageable
In
Integration Of Patni
Over The Last 5 Years, iGATE has successfully transformed Into Best in Class
performer
6 |
  Attractive Financial Performance
Attractive Financial Performance
iGATE Revenues / Margins
Key Financial Takeaways:
$941 million combined
LTM revenue
$215 million combined
LTM Adjusted EBITDA
(1)
Over $185 million in
combined operating cash
flows
Large combined cash
balance of over $300 million,
pro forma for transaction
Pro forma for the
transaction, modest net
leverage
Attractive growth profile
iGATE has proven its ability to
operate at optimal margins
Strong balance sheet metrics
-
~$121 million in cash & short
term investments as of Q3 2010
-
No long-term debt
History of stable financial
performance
Strong balance sheet metrics
-
~$318 million in cash & cash
equivalents as of Q3 2010
-
No long-term debt
Patni Revenues / Margins
7
(1) Reconciliation LTM Adjusted EBITDA
iGATE
Patni
Combined
EBITDA
56,706
162,636
219,342
Stock comp
6,009
6,550
12,559
Forex (gain)/loss
-
(17,089)
(17,089)
Adjusted EBITDA
62,715
152,097
214,812 |
  Equity
Financing Terms Equity Financing Terms
Term
Description
Investor
Viscaria
Ltd., an entity backed by funds advised by Apax
Partners
Security
Convertible Participating Preferred Stock
Commitment
$270 Million to $480 Million
Preferred Dividend Rate
8.00% per Annum, compounded quarterly; Payable in Kind
Participation in Cash
Dividend on Common
On as-converted basis
Conversion Price
$20.30 per share
Company Conversion Option
Anytime after 18 months, if the common share price exceeds 205% of the
Conversion Price
Holder Optional Conversion
Preferred principal plus accrued yield convertible into common shares at
any time
Holder Put
At 6 years from closing date for cash at par plus accrued yield
Holder Change of Control Put
At greater of as-converted value and formula amount
Mandatory Conversion Date
6 years from closing date unless sooner converted
Participation in Liquidation
At greater of (i) par plus accrued yield and (ii) as-converted value
Voting Rights
Full voting rights on as-converted basis (upon shareholder approval as
required by NASDAQ)
Board Seat
Investor entitled to 1 Board seat, 2 if Board is has more than 10 members
About Apax
Partners:
$38 billion under
management
Established in 1969 in
the U.S.
Extensive experience in
partnering with
strategic shareholders
Global presence
Sector focus
8 |
  Financing the Deal –
Debt Financing
Financing the Deal –
Debt Financing
iGate
has
debt
commitment
from
Jefferies
&
Company,
Inc.
and
RBC
Capital
Markets,
LLC totaling up to $750 million, consisting of:
–
Approximately
$600
-
$700
million
for
transaction
financing,
depending
on
the
number
of
shares acquired in the mandatory tender offer; and
–
$50 million revolving credit facility
The long-term capital structure will likely consist of Senior Notes and be put
in place during Q2 2011
Based on the available commitments, pro forma leverage expected between
3.0x-3.5x fully consolidated adjusted EBITDA, and net debt(1) expected
below 2.0x fully consolidated adjusted EBITDA
Given the combined Company’s anticipated growth and expected free cash flow
generation, iGate
expects net leverage levels to decline continuously
(1)
Net
Debt
is
total
debt
less
cash
on
iGate
and
Patni’s
balance
sheet
9 |
  Summary
Of Key Takeaways Summary Of Key Takeaways
Creates “Tier 1”
Player
End-to-End
Capabilities
Team with
Transformational
Experience
Attractive
Financial
Performance
Broad Vertical
Mix
Diversified Blue
Chip Client Base
10 |