IT firm Polaris Financial Technology today said it will demerge its products business into a separate entity , a move aimed at driving the next phase of growth for the Chennai-based firm.
After demerger and regulatory approvals, the product entity will be called 'Intellect Design Arena Ltd', Polaris said in a statement.
It will comprise of four businesses - Global Universal Banking, Risk and Treasury Management, Global Transaction Banking and Insurance, it added.
"This is a decisive step towards unlocking the potential of the company to respond to emerging opportunities in Financial Technologies in the coming decade. In fact, it is a win-win for customers, employees and investors alike," Polaris Financial Technology Executive Chairman Arun Jain said.
Shares of the company closed at Rs 152.80 apiece, up 11.57 percent from the previous close on the BSE. Polaris will file the Scheme of Demerger with the stock exchanges, SEBI and High Court and every shareholder of Polaris will receive one share of Intellect.
"Polaris Financial Technology Ltd will continue to run the services business with a strong vertical and solution focus," it said.
For the October-December 2013-14 quarter, Polaris had reported a growth of 25 percent in its net profit at Rs 51 crore year-on-year. Revenues rose by 12 percent to Rs 643 crore y-o-y.
The company had announced the next phase of growth - Polaris 4.0 in January 2012. Since then, the company has taken steps in four stages that led to the decision to de-merge, it said.
After identifying major opportunities and constraints, Polaris focussed on strategy design, anchored by its Board and Boston Consulting Group (BCG).
In January last year, it set up a special Task Force internally to work on the change Design. Between July 2013 and January 2014, the business of Polaris was re-organised into distinct services and products businesses, with independent CEOs, it said. Jitin Goyal will continue as Chief Executive Officer of the services business and will be based in London.
In the Products entity, Manish Maakan will continue as CEO of the Intellect Global Transaction Banking (iGTB) business operating out of London.
Jaideep Billa and Venkatesh Srinivasan will continue to be Joint CEOs of Intellect Global Universal Banking and Intellect Risk and Treasury business, operating out of Singapore and Mumbai, respectively.
Pranav Pasricha will continue to be CEO of the Intellect Insurance product business, based in New York.
Polaris Holdings, whose name has been changed to Polaris Banyan Holding, will continue to be the promoter of both the companies. Both companies therefore will operate as Polaris Group Companies, each with its independent management team and Board of Directors.
For the third quarter ended December 2013, the products business accounted for Rs 146 crore or 22.7 percent of the company's revenue.
The Board of Polaris has decided to offer a special option to the shareholders of Intellect to exchange the shares (should they wish to) allotted pursuant to the demerger against fully secured non-convertible debentures (NCD).
These NCDs shall have a face value of Rs 42, with a coupon of 7.75 percent p.a., redeemable at par after 90 days.
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