WNS lines up FPO for Warburg Pincus exit

WNS, the New York Stock Exchange-listed business process outsourcing company, has filed a shelf-registration statement with the Securities and Exchange Commission (SEC) that would give its largest shareholder, private equity Warburg Pincus, an exit route.

If the registration is approved, it will allow Warburg Pincus to offer and sell, in one of the more offerings, its entire 21,366,664 shares or 48 per cent stake. It will also allow WNS to offer and sell up to $50 million ordinary shares or American Depository Shares.

Shelf-registration is a popular name for the SEC rule allowing securities issuers to file registration statements and sell the securities in a public offering at a later date.

“The board, which also consists of one representative of Warburg Pincus, will decide on the future action, as and when required. The action taken yesterday would provide the opportunity for WNS to serve three purposes, with a future possible sale of shares, both primary and secondary. It would ensure the company and Warburg Pincus will act in concert for an orderly exit of Warburg’s holdings. It will enable the company to raise capital for future strategic investments and finally, improve liquidity in stock to the benefit of all shareholders,” said a company spokesperson.

After the SEC approval, the company will have a shelf life of three years to go through the sale process. Analysts in the US have taken the announcement as a positive move. “Potential primary share issuance and sale by Warburg would provide much needed (in our view) float to what has historically been a thinly traded stock,” said a Wells Fargo note.

According to the filing, Warburg Pincus, for its 48 per cent stake, has proposed maximum offering price of $12.08 per share.

This values Warburg Pincus shareholding at $258 million. However, experts said this was not the final price and Warburg Pincus will come to an appropriate pricing when the actual process starts.

The PE player has been in the company since 2002. In 2009, Warburg Pincus had initiated process to exit from the company. PE players Kohlberg Kravis Roberts & Co (KKR) other than Bain Capital, Carlyle and BPO-IT players such as Genpact and Cognizant had apparently shown interest in acquiring a majority stake in the company. However, the deal could not get through due to valuation mismatch.

Warburg Pincus was looking at a deal value of $380-400 million. In 2009 August, the company in an SEC filing said: “The board of directors has completed its consideration of the expressions of interest received from interested parties regarding a possible change of control transaction, and has decided not to pursue further discussion.”

Other major shareholders in the company include FMR LLC (14.30 per cent), Columbia Wanger Asset Management (13.45 per cent) and Nalanda India Fund (11.73 per cent). WNS reported revenue of $369.4 million at the end of March 31. It has 21,000 employees across 23 delivery centers.