Virtusa going public in US

Virtusa Incorporation, the leading US IT firm, will go down in history as the first Lankan run US firm to list on the NASDAQ Stock Market in the United States, according to company officials.

“Virtusa is planning on a possible listing in the NASDAQ,” a senior company official told The Sunday Times FT, adding that this move is being discussed by the top management and it is highly likely that Virtusa will go for an initial public offering (IPO) this year. “They were contemplating an IPO for sometime and now they feel it is the right time,” he said. He said that with this move, Virtusa will be the first company that was founded by a Sri Lankan to be listed in the US and even globally.

Kris Canekeratne, Chairman and CEO of the company founded it in 1996 in Massachusetts. In addition to Virtusa, he co-founded ‘edocs’ a leading provider of electronic account management and customer care, while being one of the founding team members at INSCI Corp., and was on the executive management team that took the company public in 1994.

The company official did not comment about why Virtusa has planned to launch an IPO but said that it may be due to aggressive expansion. Last November, the company announced the expansion of its operations in Sri Lanka.

“It is a very forward looking move by this company and it will attract a larger investor base,” an industry analyst added.

Many industry analysts said that this move gives a fairly large insight into the company’s financial performance and its readiness to list, which also means that it has a high level of corporate governance. Virtusa has more than 3500 employees and its headquarters are based in Westborough, Massachusetts, USA, while it has offices throughout US, Europe and Asia with Technology Centers in US, India, Sri Lanka.

NASDAQ is the largest U.S. electronic stock market, with approximately 3,200 companies. NASDAQ listed 126 IPOs, including 20 international listings in 2005, representing 59 percent of all IPOs on all U.S. markets and US$12.3 billion in IPO capital raised in 2005.
“This decision to list on the NASDAQ showcases how much wealth and value Virtusa has and the company’s comfort levels in being transparent,” a stock market analyst said.

NASDAQ requires prospective listing firms to meet a set of quantitative requirements and an IPO will have to meet share ownership and distribution standards.

An industry analyst said that there is a huge benefit in such a listing, as it will create a huge value generation for the company.
“This will also propel the country to be noticed by millions of investors, because of Canekeratne,” an industry analyst said. He said that it is believed that as much as 50 per cent of revenues of the company come from the hi-tech and independent software vendor (ISV) sectors and the rest from telecom, financial services and retail verticals.

Currently in its eleventh year of operations, Virtusa has been recognised with several recent awards, including the “Silicon India 100” award and the “Global Services 100” award in March 2006, which identifies Virtusa as one of the world’s Most Innovative Service Providers.