Will list merged insurance biz on NYSE: Mastek

Below is the verbatim transcript of Farid Kazani’s interview with Ekta Batra and Reema Tendulkar on CNBC-TV18.

Ekta: Can you start by giving us the rationale of entering into this merger agreement with Cover-All Technologies and what would this mean in terms of a listing on NYSE?

A: This is one of the strategies in terms of creating shareholder value and building a strong portfolio in the insurance industry globally. Cover-All is an existing property and casualty (P&C) insurance company with 150 people and close to 30 clients.

It is listed on the NYSE market and what we have done is we have entered into a definite agreement with Cover-All Technologies to kind of have Cover-All merged into our Majesco US arm which is our insurance company in the US and in turn for the share swap which is a 100 percent stock-to-stock transaction, the Cover-all shareholders will get 16.5 percent of the combined company equity and the Majesco Group shareholders will hold 83.5 percent. Majesco will be the surviving entity and will get listed after getting the necessary approvals including carrying out the resistance on the NYSE and the shareholder approval.

We expect this transaction to get closed around the second quarter of 2015 and from the business standpoint this has been a path breaking strategy for us. It does create a paradigm shift in our business; it gives us a great positioning in the marketplace. Cover-All and Majesco put together will have a strong customer base, will have a very wide product portfolio including domain centric insurance professionals, world class software and an impactful customer service preposition. So, it is one of the strategies that we had and we are quite lucky to have got into an arrangement with Cover-All to merge them with our Majesco arm in US.

Reema: Can you just repeat what the revenues of Cover-All Technologies were as well as the margins and will this transaction be EPS accretive for the combined entity?

A: Cover-All Technologies as I mentioned is having a size of USD 20 million in revenue, EBITDA margin of 17 percent odd and the entire transaction will be EPS accretive for the combined company. It is in our sweet spot as I mentioned in the P&C space and what it does is it takes us to the USD 100 million mark which is something that we wanted to meet the threshold. It also gives an opportunity for us to list on the NYSE and in short create tremendous shareholder value for the Majesco shareholders in the US and for the Majesco India shareholders once we have the demerger panned out.

Reema: There have been so many developments in the company, can you tell us what all will be listed? The software business will be listed in India, Majesco’s India business will also be listed in India and plus Majesco’s US business will be listed in NYSE? Are we understanding it correctly, there will be three arms which will be listed overall from the Mastek’s table?

A: First of all there will be demerger of the insurance company for Mastek and what you will see is the erstwhile Mastek will remain a solutions company listed on the Indian exchange. The new company which gets spun off is going to be Majesco India and that will be listed on the Indian exchanges. Majesco India will be the parent company of Majesco US and Majesco US will end up being listed on the NYSE subject to the various registration and regulatory and shareholder approvals.