Mastek, a leading player in the IT space, said it would demerge its insurance products and services business into a new company, Majesco. This will be followed by the transfer of the offshore insurance operations business by Majesco to a step-down subsidiary Majesco Software Solutions Private Ltd. (MSS India), a wholly-owned subsidiary of MajescoMastek Insurance Software and Solutions Inc.
Addressing a press conference, Sudhakar Ram, Managing Director & CEO, Mastek, said Mastek shareholders would get one equity share of Majesco for every equity share held in Mastek. Majesco is to be listed on the Bombay Stock Exchange and National Stock Exchange where Mastek shares are already listed.
For Mastek, insurance constitutes around 55 per cent of business, government around 26 per cent with other verticals being financial services and retail. The insurance products and services business had revenue of Rs.507 crore in 2014 while the vertical solutions revenue was Rs.416 crore.
Mr. Ram said the insurance business had a customer base of more than 80 in the U.S. “Majesco is well positioned to gain a large share in the growing U.S. insurance market, and will pursue organic / inorganic opportunities.”
The scheme is subject to approval of the High Courts of Bombay and Gujarat, shareholders, and creditors of Mastek and SEBI.
The restructuring provided an opportunity for shareholders to participate in the businesses of their choice based on their risk-reward profile, Mr. Ram said, adding “it will facilitate businesses to independently pursue their growth plans through organic / inorganic means and will enhance management focus and operational flexibility.”
On the Bombay Stock Exchange on Monday, Mastek stock closed up 15.33 per cent at Rs.270.45.
